Thursday, October 8, 2009

October 9, 2009: Couples Retreat

There is only one movie opening wide this weekend, and I have no idea why it has no competition, because if I were a studio execuctive, I would sure as heck counterprogram against this. It's "Couples Retreat," (CPLRT), starring Vince Vaughn, a couple of his buddies, and some cute women who look good in bikinis. I do not understand the appeal of this movie, and I understand the price of the stock even less. It's been floating above H$80 for a couple of weeks. That's a $30 million opening weekend. I just don't buy that. The price has been dropping; it's at H$75, down from H$86. The strike price is right on the money, at least given the recent price of the stock, at H$30. The call (CPLCA) is at H$2 and change, although it is dropping. Makes sense given the stock price, but I have no idea why anyone would go long on the call. This does not look like a $35 million movie. The put (CPLPU) is rising, coming close to H$3, which makes more sense.

I just don't sense anything original about this movie. It looks like a frat boy comedy for adults. Which strikes me as a contradiction. It's opening on 3,000 screens - not surprising, particularly given the lack of competition.'s Derby predicts $26 million, and I think that's a little high. It's at 8% on, so apparently critics agree with me.
Stock: Short
Call: Short
Put: Long

Update Monday morning: OK, I found out why there was no counterprogramming against this movie: it was much more popular than I was expecting. I mentioned this to a friend, with a perplexed expression on my face, and he had a two-word answer: "date movie." Which suddenly explained it: couples could go see this. The men were attracted by the women in bikinis, and the women were attracted by the idea of going to see a movie about relationships. So it opened with more than $35 million, and adjusted up. Weekly opportunities for more humility, that's what HSX offers.
I did learn something very interesting this weekend: the price of this movie on was very different than it was on HSX. It halted at H$69 on HSX on Friday, but it was trading about 20 points higher, in the high 80's, on Cantor Exchange. I shorted it on Cantor, thinking that I was taking advantage of a great opportunity for arbitrage. But the price on Cantor, even though it was much more thinly traded, was actually much more accurate. I guess people playing with semi-real money do better research, and have a better idea of what they are doing, than people playing a game. At least that was the case this weekend.

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