One trend of this week is that all the movies are off from their highs. I'm not sure if we are in a post-Labor Day Haze, or if we are in that lull between summer blockbusters and awards season movies.
One slight exception is Tyler Perry's "I Can Do Bad All By Myself" (ICDBA), which is at H$70, fairly close to its high of H$75. I'm not sure what it's about, but the trailer, short and simple as it is, is very funny. I try not to be against Tyler Perry. HSX has set the strike price at H$30, a shade on the high side, but not reasonable. The call (ICDCA) is doing well, almost at H$3, but the put (ICDPU) is almost exactly the same price. H$70 suggests an opening weekend around $25 million, so the call looks overpriced. But it's otherwise a slow weekend, so Perry's timing might be impeccable. His last movie, "Madea Goes To Jail," opened with $41 million. Like I said, I don't like betting against Tyler Perry.
Stock: Long
Call: Long
Put: Short
There's yet another horror movie featuring hot young people being killed off; this time they're sorority sisters, hence "Sorority Row" (HSROW). As usual, I have no idea how to judge the appeal of these movies, so I am just going to go long, because H$27 feels cheap to me. Strike price is perfectly positioned at H$10. The call (SRWCA) isn't doing well, down slightly from the IPO, but the put (SRWPU) isn't all that great, either, at only H$1.35. The reviews are decent so far; it's at 63% on rottentomatoes.com, but that's only with 9 reviews. I'm going for the sweet spot between the two, right about $10 million. Someone isn't looking forward to this movie.
Stock: Long
Call: Short
Put: Short
Last and, unfortunately, quite possibly least, is "Whiteout," (WTOUT) a thriller/action something or other that takes in Antarctica. That's an interesting place to set a movie. Geography automatically lends a certain amount of drama, but also presents some problems, not least of which is a lack of visually interesting landscape, as suggested by the title. Also, it means that all of the characters are going to spend large chunks of screen time bundled up, i.e. hiding their figures, although apparently Kate Beckinsale, the star, takes a shower. Eye candy and all that. The stock is heading south, along with the plot (sorry, couldn't resist), down to H$25, from a high of H$43. Expectations are being lowered right along with the temperature. Strike price is H$10, again nice call by DMac. The call (WHOCA) is following the stock, below the IPO, with the put going in the opposite direction, coming close to H$3. I don't think this will open below $7 million, so I am going to go for the sweet spot again, just below $10 million for the weekend.
Stock: Long
Call: Short
Put: Short
Update Friday morning: Sorority Row and Whiteout are both tanking. I have a new rule that I don't change positions on Friday morning unless a stock moves by more than 10%. But, since they are both doing that, I am reversing positions and shorting both.
Update Monday morning: Well, I should have bet against Tyler Perry, or at least against the overpriced options; his movie debuted at $24 million, a solid opening, but nowhere near $30 million. The stock adjusted down, by about H$7, not a bad fall, but a drop that I missed. All the other openers adjusted down, as well. I got the stock and the call right on Sorority Row, but I was not pessimistic enough about, so I missed the put. Both that and Whiteout opened at about $5 million, way off the respective $10 strike prices. No sweet spots for any of them. But I got Whiteout exactly right, so I got 5 out of 9 this weekend. 9 the movie opened slightly below expectations, and I was wrong on my picks in my portfolio, but since I didn't write about those here, I am not counting them. So I was above .500 for the weekend, but not by much.
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