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(Bloomberg) – A basket of so-called memes stocks is booming, fueled by the afternoon rallies for GameStop Corp. and AMC Entertainment Holdings Inc.
The group of 37 favorites of retail traders tracked by Bloomberg climbed 10% on Tuesday, the highest since early June, as trading volumes accelerated. Two of the most-followed memes stocks, GameStop and AMC, jumped 28% and 20% respectively.
The afternoon rally surprised most analysts as investors await comments from Federal Reserve Chairman Jerome Powell in Jackson Hole later this week.
“I expected some calm while waiting for Jackson Hole, but it looks like ‘Meme Stock Mania’ sees an opportunity here,” said Ed Moya, senior market analyst at Oanda Corp. after the options expired last Friday.
Trading volume also jumped, with AMC surpassing 200 million shares traded for the first time since mid-June. With GameStop, around 14 million shares have changed hands, more than ten times the amount typically traded in the past five sessions.
The dizzying rally marked the latest turning point for a group of stocks that have captivated investors throughout 2021. While the basket of even stocks has jumped over 75% so far this year, the gains are pale compared to the best-performing AMC and GameStop in the group, which racked up gains of around 2,000% and 100% respectively.
Retail traders have been sending shares of once-discontinued stocks like AMC to soar since January, when free trading apps like the ones offered by Robinhood Markets Inc. became household names. The gains made AMC and GameStop the biggest companies in the Russell 2000 earlier this year before GameStop moved up to the Russell 1000 Index.
The force spread to other retail favorites like Naked Brand Group and Clover Health Investments Corp., which at one point climbed more than 10% each. Robinhood Markets, which itself has become a meme stock, rose 9% on Tuesday.
Options trading for AMC and GameStop has stood out against recent trends. AMC’s call options with an exercise price of $ 40 and $ 50 were among the most active on Tuesday for equity-linked derivatives, according to Bloomberg data.
“Lack of interest appears to be a non-factor for AMC and GameStop, so this move is just a return to retail in purchasing options,” Moya said.
(Updates stock movements, adds analyst comments and additional details from the third paragraph.)
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