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.