February 26, 2010: Cop Out, The Crazies

Two movies opening this weekend, both pretty normal. The Oscars are in a couple of weeks, and that weekend will soak up moviegoers' attention, so I'm guessing that studios are dropping deadweight into the space just before that.

Kevin Smith has directed a movie about two cops called - get this - Cop Out (2COPS). I'm not a big Kevin Smith fan. Couldn't finish Clerks. I liked Dogma, but recognize that it's not a very polished film. This is the first movie that he has directed that is not from his own script. He may be thinking that it's time for him to grow up as a filmmaker, although no bets on that one. One can only stay a fanboy forever, although he is certainly stretching it out. The stock is currently in the mid-50's, down from a high in the mid-60's, and it has been edging downward for some time. The strike price is H$20, just right, with the call (2COPCA) doing well at H$3.30. The put (2COPPU) is above IPO, at H$2 and change. The CX derivative is just a smidgen below the stock. On Cantor, it's at $60, not terribly surprising. So all signs are pointing, so far, to a $20 million weekend. Except the score on rottentomatoes.com, which is at 13%. I couldn't find anything even remotely entertaining about the trailer, let alone funny. Smith is a smart man, but he's not a particularly disciplined one. He has enough of a reputation to attract his fan base, but I don't think he's going to get much beyond that.

Stock: Short

Call: Short

Put: Long

CX on HSX: Short

Cantor: Short

Also coming out this weekend is what looks - to me, at least - like a generic horror movie, The Crazies (CRAZI). It's a remake of an old George Romero movie. I've never heard of the original, but that doesn't mean much. Stock is at H$42, which is a high. It's been moving up steadily. It's going out on 2,476 screens (2COPS is going out on 3,500, which I think is more of a desperation move than anything). Strike price is H$15, again, just right, with the call (CRAZCA) heading northward, at H$3 and change. The put (CRAZPU) is below the IPO, another good sign (although just barely). The CX derivative is at H$38, which is something to keep an eye on. What's particularly interesting is the critics' perspective: it's scoring an eye-popping 88% on RT. Ain't It Cool News is hosting a screening with the director tomorrow (that would be Breck Eisner, son of Michael, ex-chairman of Disney), which sounds like marketing heaven. Something about this movie sounds like it is going to be bigger than expected.

Stock: Long

Call: Long

Put: Short

CX on HSX: Long

Cantor: Long

Update Friday morning: Both of these movies are down on HSX and Cantor this morning, although 2COPS is down more, almost H$4, while CRAZI is down H$2.66 at the halt. That much of a drop confirms my opinion on 2COPS - that's a strong indication that it is going to bomb. I read a couple of positive reviews this morning, one in the LA Times, one in the LA Weekly, and a friend of mine thot the red band trailer was funny. But that same friend also expressed more interest in CRAZI. They're competing for the same audience, young men, but it sounds like CRAZI is a better movie. The drop for 2COPS comes on top of mucho negative publicity, so it confirms my opinion. CRAZI still has its fans, although it's at 72% on RT. That's still quite good. expectations are still fairly low, so I'm still going long on CRAZI.

Update Monday morning: My predictions were quite good this weekend, as were the markets'. 2COPS brought in $18.5 million, and adjusted less than H$1, to H$50.13. So I got all of those predictions right. CRAZI came in better than the market expected, but right around where I was thinking, at $16.5 million. Again, I nailed it. 2COPS had a per-screen average of $5,894, while CRAZI had a PSA of $6,572, so it did better on that score. I am staying short on 2COPS, but holding CRAZI long to delist. 2COPS had a lot more screens this weekend, but that means that there are a lot more screens to pull next weekend. Since CRAZI had a higher PSA, theaters have slightly more incentive to keep it on their screens. We'll see what happens.

February 19, 2010: Shutter Island

There's only one movie opening this weekend, but it's a doozy: Martin Scorsese' Shutter Island (SHISL). This movie has something of a tortured history already: it was supposed to be released last year, just in time for Oscar season, but the studio, Paramount, decided that it was a little short of cash, so they decided to wait.

That was probably a good call. In the meantime, the suspense has only built. The marketing has been relentless, to the point of overkill. But their is still some sense of excitement about this movie. It is, after all, Martin Scorsese. I'm not a huge Scorsese fan - I think he's made a few too many movies about brilliant but self-destructive white guys - but he is quite the craftsman. Apparently the story is quite a tough one to tell, but supposedly he pulled it off. Critics are very divided, with a 63% approval on rottentomatoes.com. This sounds like a love-it-or-hate-it experience. It's going out on almost 3,000 screens, which should be more than enough.

The stock is right around H$100. Strike price is H$40, which translates to a stock price of H$108. But the call (SHISCA) and the put (SHISPU) are above H$3, although the put is close to H$4. So signals are mixed. It's clearly going to have a good opening weekend, but the question is how good.

There isn't any competition this weekend, and not much competition among movies currently out. There aren't any intense psychological thrillers out there. The level of interest on IMDBPro is extremely high. Scorsese's last movie - which also starred Leonardo DiCaprio - was The Departed, which opened to $26 million. Mystic River, another psychological thriller from a Dennis Lehane novel, made $156 million worldwide. This film is pretty much a known quantity. You know what you're going to get with a Scorsese movie. The people who like it are going to love it. OTOH, there will be a fair number of people who don't like it, or who don't get it.

The key here is the level of interest. The buildup has been pretty intense. The stock is hitting its high on HSX, and the CX derivative is right around the same price. The pros are that it's a Martin Scorsese movie, the marketing has been very intense, and it's quite probably a very good movie. The cons are that it's a Martin Scorsese movie, and he doesn't make happy movies. Also, it sounds like it's a bit long. But there is no question that it will be very intense.

Last weekend, Valentine's Day blew away all expectations in part, I think, because many people wanted some kind of escapism. I think this will attract a number of people who just want to know that they are going to see a good movie.
Stock: Long
Call: Long
Put: Short
CX on HSX: Long
Cantor: Long

Update Friday morning: Well, the signs are a little different than they were yesterday. The call is down, to H$2 and change, while the put is about double that. So $42 million is not looking realistic. The stock was down as much as H$4, but rebounded, and halted down H$2, to H$92.25. That's a $34 million opening weekend, which is in line with the put. The CX derivative is down H$3, to about H$94, so it's sending the same signal. On Cantor, it's down $5, to $100. Dampening expectations all around. I reversed position on the call, so I am now short the call, but I kept my short on the put, because I think it will do somewhat better than $36 million. It's still doing quite well among critics and users, with an A- on Yahoo, and an 8.5 rating on IMDB. It feels like more people are getting it than are not, although the people who don't get it or don't like seem to have the stronger opinions. I'm only long 5 shares on Cantor, so I am prepared for some surprise on the upside, but not much. I don't think the movement either way is going to be very dramatic.

Update Sunday night: Well, I nailed it. Damn does that feel good. I got everything right. It cleared $40.20 million this weekend (that's before whatever the adjustment is tomorrow). Talking about hitting the sweet spot. Wow. The stock adjusted from H$92 to H$108, a nice adjustment upwards. The CX derivative is currently at H$96, so the market is already assuming that it will drop, and delist below the adjust. I disagree, I am staying long to delist. And, of course, I got the price right on Cantor.