And yes, there is some conjecture in all of this, but sometimes some guesswork based on incomplete info and conditional probabilities is the best we've got. I would guess many more arbs have chosen to synthetically short AMC than the 23% number based on options OI and the difficulty to borrow outright. I truthfully only thought back to this RDBX/CSSE scenario when I tried to put on the spread myself and couldn't get the borrow on AMC. The clear trade here is long APE and short AMC at the moment. Also agreed that once this conversion passes, AMC is basically done for due to basically unlimited dilution which is not currently possible. Totally agreed that APEs have gotten fleeced and it is pretty unfortunate for the retail investor. Call skew priced in here supports that too. If I wasn't clear enough, I actually DO NOT THINK this is the most likely scenario, but there is a unique feedback mechanism that has some chance of playing out which embeds some convexity into AMC. The intent here was to highlight a possible scenario based on a similar magnitude arb spread that previously occurred. I will reevaluate as this situation unfolds. I am long AMC and have no position in APE. Would love to hear some thoughts on this. It will eventually converge but the path it takes is anyone's guess.
0 Comments
Leave a Reply. |