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AMC (NYSE:AMC) stock looks tired. Even the recent blockbuster release of Top Gun: Maverick failed to fuel a rally. The latest Tom Cruise release set box offices records for the best second weekend receipts ever. Yet shares of AMC continue to be far less than a box-office hit for investors.

Maybe investors and analysts are finally focusing on the future and the fundamentals. The short squeezes and shenanigans that propelled AMC stock to previous ridiculous heights has all but ended. Eventually profits and valuations do matter.

This is especially true for AMC as the business model of theater chains remains severely challenged by the onslaught of streaming. Having the likes of Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN) and Netflix (NASDAQ:NFLX) as competitors certainly should put fear in investors hearts.

AMC continues to bleed cash. The last four quarters show a cumulative loss of $1.78 per share. Even on a forward basis, the outlook is bleak. FY 2023 consensus estimates are for a loss of 36 cents per share. FY 2024 aren't much better with average estimates showing a further loss of 34 cents per share. At some point a company has to turn a profit to survive.

No doubt AMC has tried every trick in the book to prop up the stock. Several dilutive secondary stock offerings and a head-scratching partnership with a mining company have famously failed. This should give investors pause.

Technical Take

AMC stock continues to leak lower. 9-day RSI is stuck in neutral. MACD is hugging the zero line. Bollinger Percent B is mired at a midrange reading. Shares are glued to the 20-day moving average. All in all, it's a very tepid technical backdrop.

Source: thinkorswim® platform from TD Ameritrade

AMC has broken long term support at the $14 level. This will now serve as major overhead resistance. Look for continued consolidation at best as the meme mania that fueled the frenzied rallies of a year ago are all but a distant memory.

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Shorting AMC stock outright can still be both risky and expensive. Cost to borrow to short the shares has fallen recently but is still at roughly 10%. Plus even a failed short squeeze attempt can come out of nowhere and lead to angst for anyone outright short the stock. Luckily, the options market provides a risk defined alternative to shorting the stock that still provides solid returns.

On April 1, I recommended selling the June out-of-the money $36/$38 call spread to fade any rally in an overloved and overhyped AMC stock. That trade will highly likely expire worthless for the full potential gain given that AMC is now trading nearly 50% lower than when the initial trade was recommended.

In a similar vein, traders should consider selling a new out-of-the money call spread to collect premium on a go-nowhere AMC. Even though implied volatility (IV) has fallen recently in AMC options, it is still well over 125. This means option prices are very expensive and favors option selling strategies when constructing trades.

So to position to profit from continued consolidation, a bear call spread makes probabilistic sense.

How To Trade AMC Stock Now

Sell the Sep $16/$18 call spread for 35 cents net credit.

Maximum gain on the trade is $35 per spread. Maximum risk is $165 per spread. Potential return on risk is 21%. The short $16 strike price provides a 23% upside cushion to the current price for AMC stock. It is also structured well above the major resistance area at $14.

On the date of publication, Tim Biggam did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

The post No, the Success of Top Gun: Maverick Isn't Enough to Save AMC Stock appeared first on InvestorPlace.