(Reuters) -AMC Entertainment shares fell as much as 12% on Friday, after a small research house, Iceberg, tweeted that it held a short position on the theater chain operator's stock.

"Our position is based on the fundamentals of the company and the fact its stock price has been inflated by call options, which is always temporary," Iceberg Research said in an email statement.

AMC did not immediately respond to a request for comment.

Buying call options in a company allows investors to take bigger risks than by simply acquiring shares.

Options can be worthless when they expire, but there is theoretically no limit to how much their value can rise, and holders only have to put down a fraction of the stock's value to get the exposure.

Volatility in stocks including AMC and video game retailer GameStop have in recent weeks helped revive a meme stock craze that had peaked in January, fueled in part by retail investors flocking on platforms such as Reddit's WallStreetBets.

AMC shares were last down nearly 8% at $49.99 in early trading.

(Reporting by Akanksha Rana in Bengaluru; Editing by Patrick Graham and Arun Koyyur)