First up is a romcom with Queen Latifah and a rapper named Common, Just Wright (JUSTW). I'm not clear on why you would call yourself something that literally describes you are lacking in any kind of unique quality, unless it's a play on words - it's very uncommon, I suppose, to call yourself Common. Regardless, I am, as you might have guessed, not all that familiar with Mr. Common's work. I am more familiar with Queen Latifah's work onscreen, and just loved her in Stranger Than Fiction. It doesn't hurt that that is one of my all-time favorite movies. The stock had a very nice rise for a few weeks, going pretty much straight up, but it has been dropping precipitously for the last week or so. It's at H$27, down from a high of H$37. Strike price is H$10, a good price. The call (JUSTCA) is down to H$1 or so, roughly in line with the stock. The put (JUSTPU) is at H$3, which seems on the pessimistic side. It's only going out on 1,800 screens, not a great release. Critics are not impressed, with only a 33% rating on rottetomatoes.com. It sounds utterly predictable and safe, which is both a good and a bad thing. But it doesn't sound terrible, which counts for something. I'm looking for the sweet spot, around $10 million, right between the call and put. There are fairly moderate expectations, which, hopefully, will not be hard to beat. But this bears careful watching. Note: For some reason, there is not a CX derivative. Not sure why.
Stock: Long
Call: Short
Put: Short
Next up, with better prospects, is Letters to Juliet (LJULT), looking like something between a romantic comedy and a romantic drama. Doesn't look funny, but doesn't look like a tearjerker, either. Looks quite inspiring, just maybe. It's an intriguing idea: a woman vacationing in Verona, Italy, where Romeo met Juliet, finds a letter from 1957. She eventually reunites two long-lost lovers. Very sweet. The stock has been rising steadily, even this week. It's currently at H$48, a high. Hmmm. Looks like we might have us a sleeper hit on our hands. It's going out on 2,800 screens, and it doesn't have a lot of competition right now. Strike price is H$20, which is way optimistic. Call (LJULCA) is, whaddya know, barely treading water. If this makes the strike price, we will know we have a sleeper hit. Put (LJULPU) is also predicting sub-$20 numbers, currently around H$3 and a half. The CX derivative is actually behind the stock, at about H$45, which is an interesting sign. Really suggesting a sleeper hit with this one. Critics are not enthusiastic about this one, either, possibly given that it looks completely predictable and safe. But it also looks great, and the idea of a romantic movie with an older woman at the center of it (Vanessa Redgrave) is kind of nice. And I just love the shot of her long-lost love showing up riding a horse. Completely cliched, but utterly charming for the right people.
Stock: Long
Call: Short
Put: Long
CX: Long
Finally we have the blockbuster wannabe that looks like it might very well be a bust, Robin Hood (RBNHD). Russell Crowe and Ridley Scott team up in a movie that just about screams "Gladiator in Sherwood Forest." Although there are also shots in the trailer of a bunch of ships landing on a beach, and being met with fierce resistance. Which also suggests "Saving Private Ryan in Sherwood Forest." Regardless, this looks like an action-adventure movie that happens to take place in medieval England and happens to feature one of the iconic guerrilla warriors of history. It looks quite serious, with many sobering scenes of old men passing down wisdom to young men, and the young men avenging the old men, with most of it shot in shades of grey, green, khaki and drab. With the occasional orange when there is firelight present. I am not optimistic, and neither, apparently, is anyone else - the stock is down to H$91, from a high of H$156. That's a catastrophic drop. Strike price is H$40, a once-reasonable target that is looking increasingly untenable. The call (RBNHCA) is still above the IPO, at H$3, but it's dropping, and I expect it to continue on that trajectory. The put (RBNHPU) is rising, as expected, aiming at H$4. The CX derivative is still at H$117, but it had farther to drop, coming from a high of H$168. It's going out on more than enough screens, but critics are not excited, with only a 44% rating on RT. And the positive reviews are middling in their praise, struggling to find some justification for approval. Harry Knowles, in a superb review, just shreds it, calling it a "colossal failure," and justifying that description with a highly detailed outline of the actual history involved, and why this movie should have nothing to do with that actual history - it should just be a movie about Robin Hood, the idea, the legend, the myth. We're looking at a bomb of possibly historic dimensions here.
Stock: Short
Call: Short
Put: Long
CX: Short
Update Friday morning: Robin of the Hood is doing well this morning, up H$4. This is not surprising, given the beating the stock has taken over the last month. Just Wright is looking a little more right, up H$1.50, while Letters to Juliet is down from its high, down a buck and change. All of this feels like noise. The buzz on Robin Hood is just relentlessly negative; even the positive reviews are just barely that. Iron Man presents a strong contrast because its very stylized, and just plain fun. Robin Hood looks way too serious for the mood of the audience right now. Expectations for Just Wright are fairly low, and I expect they will be beat without much trouble. The one I am most nervous about it Letters. It might open a shade below where it is now, but my opinion on that is not strong enough to switch positions. OTOH, I am expecting it to build. This movie looks like a long-term bet. Some people are going to hate it, but some people are going to be thrilled that there is something for them in the theaters. Maintaining all positions.
Well this was sort of an interesting weekend for TEQP-HSX. I got all the stocks wrong, but I got all of the options right, and one of the two CX derivatives right. I wasn't far off on the stocks - RBNHD adjusted up by a little more than H$5, JUSTW was down by a little less than H$3, and LJULT (the big loser) was down by H$6. So RBNHD and LJULT each reversed the trend that they were on, while JUSTW maintained the trend, but also went against the movement on Friday. The lesson for this week is pay close attention to trends, but be clear on how much weight to give to them. The trend with RBNHD was right, and the market was basically right. JUSTW did not have much potential, and it was fairly predictable. LJULT had been surging, but didn't have a lot of momentum. Not a great weekend, but not bad. I'm just glad I shorted RBNHD at H$107.
Holding all short to delist.
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