AMC-APE Bet Has Handed 150% Gains — and 260% Losses — to Traders
- Estimated net return varies from -260% to 150%: S3 Partners
- Borrow costs, legal saga turn easy money into risky trade
An AMC theater in Austin, Texas.
Photographer: Brandon Bell/Getty ImagesThis article is for subscribers only.
A seemingly sure-thing bet on AMC Entertainment Holdings Inc. shares has turned out to be anything but, as some traders appear to have more than doubled their money, while others lost over 250%, in just a few months.
The wide range of possible outcomes in the so-called arbitrage trade underscores a truism in these kinds of wagers: timing is everything. An analysis from data firm S3 Partners shows that simply shifting the start date of the trade by one month made the difference between losing nearly 200% — possible when leverage is involved — and gaining more than 100%.