Thursday, January 28, 2010

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.

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