By Matt Scuffham and Saqib Iqbal Ahmed
NEW YORK (Reuters) – Some Wall Street traders are betting against another massive rally in AMC Entertainment Holdings Inc and other “meme” stocks this week through a type of wager in the options market that would limit their losses should retail investors behind the run-up prove them wrong.
A Reuters analysis of options data and interviews with market participants, including a Wall Street banker and a fund manager with $30 billion in assets, show that some institutional investors have ramped up complex options trades that let them bet the shares will fall.
Its increased use now, which has not been previously reported, shows how Wall Street is looking for ways to profit off the unprecedented rise of retail trading but treading carefully after some high-profile funds got buffeted earlier this year.
“It’s still dominated by these small retail trades for sure, but we are seeing sporadic big institutions tempted in just by the pricing,” said Henry Schwartz, head of product intelligence at Cboe Global Markets Inc, referring to options trading in AMC.
