Thursday, April 8, 2010

April 9, 2010: Date Night

Only one movie is opening this weekend, Date Night (DATEN), with Tina Fey and Steve Carrell. They play a married couple who go out on a date, escaping the kids. Something goes wrong with their reservation at the restaurant, so they pretend to be another couple. Said other couple apparently has trouble with certain elements of society who have nontraditional views on abiding by the laws and norms of society. So Tina Fey and Steve Carrell are suddenly on the run. I am a fan of both of them, and I am right in the target demographic, despite not being married with kids. Neither of them has scored big at the box office before, but they do, of course, have solid hits on TV.

The stock is at H$80, down today, and down from a high of H$99. The strike price is H$35, or a stock price of H$94. Call (DATECA) is right at the IPO, while the put (DATEPU) is at H$3 and change, and rising. The CX derivative is a bit higher, at H$93, but also falling. Reviews are mostly positive, but not wonderful, at 61% on RT. Shawn Levy, the director, previously made the Night at the Museum movies, as well as Cheaper by the Dozen and the Pink Panther remakes. Not an inspiring resume, but those movies have mostly made money. The fact that this is the only major release this weekend says that other studios decided to stay away from competing with this. One problem I expect this movie to have is that the real target demographic - young married couples with kids - tend to not see movies on opening weekends, specifically because, well, they're married with kids. But this could also speak to them. On the other hand, a $30 million weekend would be very good. I'm thinking somewhere between $25 and $30.
Stock: Long
Call: Short
Put: Short
CX: Short

Update Friday morning: The stock is down H$1 this morning, which is trivial. The call is barely above H$1, while the put is above H$4. Critics are still mildly in love, at 70% on RT, although most of the reviews are more excited about the stars than the material. I'm changing one position, and that is on the CX derivative. It's now at H$84, close enough to the price of the stock that it doesn't make much sense to try to split the difference.

I was slightly off, but not by much. DATEN cleared $27 million, right in the middle of my estimate. Of course, I drew a wide enough target - $25-30 million - that it's not a surprise that I got that right. My mistake was that the price of the stock on Friday morning - H$79 - was right at the high end of my estimate. Once again, I think I was letting my personal taste rule my decision a bit too much - I am a fan of both of these stars, and I want to see them do well. It has a 7.1 rating on IMDb, so I think the word of mouth will be positive. Staying long to delist.

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