January 29, 2010: Edge of Darkness, When in Rome

We only have two movies opening this weekend, and we are still in January.

When in Rome (WROME) is a cheesy romantic comedy starring Kristen Bell and Josh Duhamel, who I could not pick out of a crowd. She goes to Rome, and picks up some coins from a fountain of love. The men who threw the coins in the fountain fall in love with her, and follow her home. Sounds like it could be funny. Stock is not doing all that well; it's at H$27, down from a high of H$42, following the classic HSX profile of topping out just before the release. The strike price is rather unfortunately set at H$15, which is now absurd. The call (WROMCA) is sinking, as it should. The put (WROMPU) is doing quite well. The CX derivative on HSX is, of course, above the stock price, and dropping. On Cantor, it's above $30, just barely, but I suspect that won't last. The reviews are devastating, with only 6% on RT. It's going out on 2,400 screens, which sounds like it may be about 2,200 too many. Not hard to call this one.

Stock: Short

Call: Short

Put: Long

CX on HSX: Long

Cantor: Short

Mel Gibson is back in front of the screen in Edge of Darkness (EDRKN). It's a revenge movie, about a guy who is seeking vengeance for the murder of his daughter. It worked last year for Liam Neeson. Stock is at H$55, down from H$61. Not a bad drop, but I did see it drop H$10 earlier this week. Strike price is H$2o, right on target. Call (EDRKCA) is middling, just above the IPO price. The put (EDRKPU) is about the same place, a smidgen better. CX on HSX is at H$53, very closely following the stock. Same with Cantor. It's going out on 3,000 screens. Critics are generally positive, although far from effusive, with 60% liking it. It's an excuse for Mel Gibson to kick butt, but that sounds like a good thing. With all the signs this close to one prediction, I am going to go for the sweet spot, right at $20 million.

Stock: Long

Call: Short

Put: Short

CX on HSX: Long

Cantor: Short (where I had it originally)

Well, I came very close on both of these, but I technically got the stocks wrong on each. WROME cleared $12 million and adjusted up, but just a bit, from H$30 to H$32. EDRKN dropped, from H$53 to H$46, as it cleared $17 million. I was right about both of the calls, and right about the put for WROME. I was wrong about the put for EDRKN, but not by much. I was right about both of the Cantor predictions, which feels good. Mostly a positive weekend.

January 22, 2010: Angels and Doctors

There are two movies featuring men with wings opening this week. Plus Harrison Ford playing a doctor. It's still January. We have mild hopes for the Harrison Ford, but not much for the other two.

First up is Dwayne "The Rock" Johnson in "The Tooth Fairy" (TOFRY), about a hockey player who has to be a tooth fairy for a week. A literal fairy, complete with wings. We're in "high concept" territory here. I have a certain amount of respect for Mr. Johnson - he clearly has a sense of humor about himself, and he's taken Clint Eastwood's advice about a man knowing his limitations. I'm sure there is some entertainment value in this movie. The question for us today is how much. I'm guessing not a lot. The stock is at H$46, down from a high of H$54. Strike price is reasonably set at H$15, with the call (TOFRCA) at H$3 and change, and the put (TOFRPU) at H$2. A $15 million opening would translate to H$40.5, so the options and stock price are in alignment. The CX derivative on HSX is at H$52, and dropping. On Cantor, it's at $57, which feels too high. It's going out on as many screens as possible, at least 3,000, about what we expect. Critics are fairly savage, also what we expect - it's at 13% on rottentomatoes.com. I'm sure it will do a certain amount of business just by virtue of being a comedy. This kind of thing is very much a known quantity. I think the market has it about right. Time to aim for the sweet spot again, right around $15 million

Stock: Long

Call: Short

Put: Short

CX on HSX: Short

Cantor: Short

The next movie featuring a guy with wings is "Legion" (LEGIN) in which Paul Bettany plays the Archangel Michael, trying to save humanity from God's wrath. The ancient Israelites got Noah; we get Paul Bettany. I think the trailer looks good, but we have roughly the same phenomenon as we do with Tooth Fairy - very much a known quantity. Stock is at H$43, down from a high of H$51. Strike price is, again, set reasonably at H$15, with the call (LEGICA), again, above H$3, the put (LEGIPU) around H$2, and the CX derivative above the stock, floating around $50. Theater count is a little lower than TOFRY, around 2,400. There are no reviews on RT, which suggests that it was not screened for critics, which is never a good sign. On Cantor, it's at $42; I have it shorted at $55. Not a good sign in the bunch, other than the call. I'm playing this the same way I played TOFRY (love that symbol): looking for the sweet spot.

Stock: Long

Call: Short

Put: Short

CX on HSX: Short

Cantor: Short

Then there's a Harrison Ford movie, Extreme Measures (XMEAS), in which he plays a cantankerous but brilliant doctor. I seem to recall when he was a major movie star. I don't recall him playing too many cheerful, happy-go-lucky types, but when he played Han Solo or Indiana Jones, it was always with an incredible sense of style. Not sure where that went. It sounds like a very inspiring story - a father with two kids with a genetic disorder raises money for this eccentric doctor. I'm sure it is. But the stock is in the low H$20's, and the strike price is H$10, with the call (XMEACA) just above H$2, and the put (XMEAPU) a smidgen higher, around H$2 and a half. The CX derivative is at around the same place. It's a tad higher on Cantor, around $27. It's going out on around 2,500 screens or so. Critics are brutal, with only 13% approving, and several noting what I suspected, which is that it's basically a TV movie-of-the-week that escaped the small screen because of the presence of Harrison Ford. Still, there's a market for this stuff. Looking for the sweet spot again.

Stock: Long

Call: Short

Put: Short

CS on HSX: Long

Cantor: Long

Update Sunday night: A mixed bag. I hit the sweet spot on TOFY, and came close on LEGIN. Missed XMEAS; it fell short by a bit. I guess Harrison Ford's star power really has evaporated. Really should not have held XMEAS long on Cantor. Overall, I split the predictions exactly in half - 7 right, 7 wrong.

January 15, 2010: Book of Eli, Spy Next Door, Lovely Bones

The three movies this week are, hopefully, a bit better than the standard January fare. At least two of them look that way.

First up is Denzel Washington wandering a post-apocalypse wasteland in Book of Eli (BOELI). He's apparently trying to save the world by carrying a Bible somewhere. However, the trailer is mostly just him kicking ass in earth tones. Stock is at H$80, down from a high of H$97. This one has not suffered from lack of hype. The strike price is H$30, and the call (BOELCA) is at H$3 and some, but that's down for the day. The put (BOELPU) is above H$2, and also down today, but not by much. An H$30 strike price translates to H$81, almost exactly where it is right now. So the call is probably too optimistic, with a prediction of a stock price of H$90. The Cantor option on HSX is at H$89, but it has been extremely volatile, and that's also down from a high of H$97. It's going out on over 3,000 screens, which is good. But the reviews are not good, at only 44% on RT. I think Avatar will still be sucking up some action movie oxygen. On Cantor Exchange, it's at $86, down from a high of well over $100. None of the signs are good.

Stock: Short

Call: Short

Put: Long

CX on HSX: Short

Cantor: Short

Jackie Chan is back in action in The Spy Next Door (SPYND). I'm sure it's a standard Jackie Chan movie, but with little kids. You know what you get with Jackie, and it's usually at least OK. He's not a young man anymore, but he still brings it. Stock is at H$31, down from a high of H$35. Strike price is H$15, which may have made sense a while ago, but doesn't now. Call (SPYNCA) is right at the IPO price. Put (SPYNPU) is above IPO, which makes sense. It's going out on almost 3,000 screens, but the reviews are atrocious, at only 7% on RT. Boy, that's horrible. The CX option on HSX and the option on Cantor Exchange are both in the mid-30's. Reviews that savage mean that, quite simply, it sucks. Even little kids occasionally have good taste.

Stock: Short

Call: Short

Put: Long

CX on HSX: Short

Cantor: Short

Finally we have the most interesting - at least in terms of the backstory - movie coming out this weekend, The Lovely Bones (LVBON). Peter Jackson, he of LOTR fame, is trying his hand at serious drama. Based on a best-selling book by Alice Sebold, it tells the story of a 14-year old girl who is murdered, but doesn't quite make it to heaven. It's been in limited release for a month, and reviews have not been kind. The stock is at H$27, down from a high of H$60. Quite the drop. There are no options, since it's been out for several weeks. It's at 35% on RT, and many of the reviews are brutal. It's expanding from 57 screens to over 2,500. The CX derivative on HSX is still at H$40, but has dropped precipitously. On Cantor, it's in the mid-30s'. The book sold 15 million copies, so I think there is an audience for the movie still out there, even if it's not very good. The expectations are so low at this point that I think they will be easily beaten.

Stock: Long

CX on HSX: Short

Cantor: Long

Update Friday morning: Book of Eli is down a bit, not much, so my prediction looks good. Same with Spy Next Door and Lovely Bones. Jackie Chan's latest is down H$1.25. Not much, but it confirms the trend. Lovely Bones is up H$3.75, also confirming my suspicions that it will bounce back from terrible early reviews. Maintaining all positions.

A fairly good weekend for me, and mostly in line with expectations. I was off on BOELI, but not by much - it made $38 million, but the multiplier was 2.2, because of the holiday weekend, which I didn't take into account. It adjusted up H$3. SPYND brought in $13 million, so I was right about that one. Lovely Bones did much better than expected, with a take of $20 million. It adjusted way up, from H$31 to H$45. So I basically got two out of three right.

January 8, 2010

Happy New Year! We're in the middle of Oscar season, which means good movies. But we're also in the early part of January, which usually means bad movies. Studios tend to release clunkers in January, because there are so many big movies left over from the holiday season. So having a release date in January is not a good sign for a movie. OTOH, it's possible that some studios are reversing this trend, because they know that the other studios are releasing dreck, so they competition is weak in that sense.



One possibly good movie is Leap Year (LEPYR), the usually wonderful Amy Adams in a romantic comedy. I buy her as a romantic lead. I'm not sure why a movie called "Leap Year" is being released two years before a Leap Year, but maybe they wanted to make it ASAP. The stock has been rocketing up lately, presumably after an actual release date was announced. It's up slightly today to H$32, near a high. Strike price is H$10, which makes perfect sense. The call (LEPYCA, one of the first of the new six-letter options) is treading water, but just barely. The put (LEPYPU) is marginally higher. On Cantor, the stock is up $3 today. However, the critics are savaging it, with only 18% approval on rottentomatoes.com. The expectations are quite low, so I am going to go long.
Stock: Long
Call: Long
Put: Short
Cantor: Long

Moving away from the cheesy romcom to the cheesy horror thriller, we have Ethan Hawke in Daybreakers (DAYBR). Again, lots of movement upwards, with a recent dip. A little more serious drop, from H$49 to H$39. Call (DAYBCA) is up to H$3, against a strike price of H$15. Put (DAYBPU) is above the IPO, but not much, so there are mostly good signs from the derivatives. CX on HSX is at H$46, down of late. It's marginally higher on Cantor, but about the same as the CX. Interestingly, it's doing well among critics, at 65% on RT. Vampires rock these days.
Stock: Long
Call: Long
Put: Short
CX on HSX: Long
Cantor: Long

Michael Cera, who is, oddly enough, becoming a movie star, stars in Youth In Revolt (YRVLT) as a both a young geek and his alter ego. If anyone can pull this off, I'll bet he can. Stock has been rocketing up, but is down today, to H$24, from H$27. This is for anyone who needs a coming of age story. Strike price is relatively optimistically set at H$10, with the call (YRVLCA) right back at the IPO price. Put (YRVLPU) is, what do you know, above the IPO, at two bucks and change. This has to be a good movie to actually make money. Fortunately, it looks like it might actually be quite funny; critics are liking it, with 68% approval on RT. My guess is that the studio knows it has a good movie, and is willing to let it build by word of mouth, and that it will take off as the holiday movies fade. The CX derivative is on basically the same tragectory as the stock. On Cantor, it's been really high, and is sinking from the ridiculous price of $45 or so. But it's now down to $29, so it might be time to reverse my short.
Stock: Long
Call: Long
Put: Short
CX on HSX: Long
Cantor: Long

I was a shade too optimistic, but not by much. Daybreakers came in almost right on the nose of both the strike price and the stock price, right at $15.0 million. The stock adjusted from H$40.61 to H$40.50, down a grand total of 11 cents. Let's pat ourselves on the back, traders! Leap Year came in at just over $9 million, adjusting down H$4 1/2. Youth in Revolt performed as we expect an indie coming of age comedy to, at $7 million, down H$2. I got a couple of puts right, and most other predictions wrong, but not by much. Pretty much a wash. We'll be back next week.