Law Abiding Citizen (LATCZ) stars Jamie Foxx as an assistant DA and Gerard Butler as a man bent on vengeance after the justice system lets him down. Nice to see the white guy as the bad one. Foxx and Butler have both been in good and bad movies, and both are nominally good box office draws. It's directed by F. Gary Gray, a solid guy. Trailer looks good. Stock has been mostly up, but is retreating. It's at H$36, off from a high of H$47. The strike price is H$15, which looks a smidgen unrealistic, but the call (LACCA) is up H$3, so there's a chunk of optimism there. The put (LACPU) is below H$2, so the signals are in sync there. It's in the high $40's on the Cantor Exchange, which is a good sign. It's going to be interesting to see which is right - HSX or Cantor. It's going out on about 2,700 screens, not the widest release, but not bad. It's too early to get a good critical read. The signs are mostly positive.
Stock: Long
Call: Long
Put: Short
The first horror movie of the week is the more "normal" one, at least in terms of production and distribution. Stepfather (STPFT) looks like a decent proposition, a new addition to the family who isn't really Mr. Nice Guy. I find it scary, but I'm not a good judge of these things. The stock has never been very high, and has been drifting lower, topping out at H$22 and currently about H$17. That strikes me as very low. Strike price is H$10, which may have been a shade high, but H$5 would have been ridiculously low. Call (SPFCA) has been plummeting, and is barely above a buck. That makes sense, because this does not look like a $10 million opening weekend movie. Put (SPFPU) is rising, and may hit H$3. It should also be going out on about 2,700 screens. No reviews yet. Traders on Cantor are, again, a little more optimistic; it's above $20 there. I think this is underestimated by the market, and I'm not sure why. I think there's more potential on the upside than the downside.
Stock: Long
Call: Short
Put: Short
The next movie is already the most profitable movie of the year, and will easily be one of the most profitable ever made, measured by return on investment. It was made for $11,000. Yes, for the cost of a decent used car. Paranormal Activity (PNACT) is taking the country by storm. Stock is at H$44, and has been going straight up. There are no derivatives, and it is not listed on Cantor. Which is a bummer, because I think it would be a great opportunity to make some serious cash. We're not really quite sure how many theaters it's expanding to, because the studio, Paramount, is asking fans to ask for it. My guess is that it will have an IPO (or ICO) on Cantor when it hits 650 screens, and they don't know if it will hit that many. It's at 85% on rottentomatoes.com. One note: it will adjust at previous box office + 3.0 x this weekend. Previous box office is about $9 million. Subtract that from H$44, you get H$35, which means that it has to do about $10 million. Guess what my call is.
Stock: Long
And there's Where The Wild Things Are, one of the most highly anticipated movies of the year, based on the Maurice Sendak book. The stock (WILD) has exhibited the classic signs of hype and backlash; it marched steadily up to almost H$130, but has crashed badly in the last couple of weeks, down to the mid-H$90's. That's a bit of a recovery from H$89. The strike price is H$35, with the call (WILCA) above H$4. H$96 predicts a $35 million opening, so the call is a shade more optimistic than the stock, but not by much. The put (WILPU) is behaving as expected, dropping to below H$2. Traders on Cantor are much more optimistic, and it is at $115. It's the widest release of this week, on 3,500+ screens. Critics are mostly happy, with 67% approval on rottentomatoes.com, and many are absolutely in love with it. I'm not captivated - I'm not feeling the love from the trailer. But I don't want to bet against this kind of hype.
Stock: Long
Call: Long
Put: Short
Update Sunday night: I had a moderately good weekend; I got three out of four stocks right but I only got 3 out of the 6 options right. My thinking on WILD could have been better - there was more potential on the downside than the upside. It did $32 million, which was very good, but still sort of what the market was predicting. $30 million was much more possible than $40 million.
The contrast between HSX and Cantor Exchange was interesting this weekend. HSX was closer on WILD, even though it was off. WILD had been dropping, and that trend was right. On Cantor, however, WILD exploded upwards; I shorted it at $115.25. Feeling really good about that right now. However, HSX was wrong STPFT and LACTZ; both had been drifting steadily down, but adjusted dramatically up, LACTZ by H$25, and STPFT by H$18. But both were trending up on Cantor by Friday, and the difference between HSX and Cantor was dramatic; LACTZ was trading in the $40's on Friday, while it halted at H$32. That's a 30% difference. STPFT also never dropped very low on Cantor, and was nowhere nearly as low as it was on HSX. PNACT
So Cantor was better on the stocks that went up (LACTZ, STPFT), but HSX was better on the one stock that went down (WILD). Interesting to note that. That was certainly true last week, when Couples Retreat adjusted up strongly, which HSX missed completely (as did I).
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