June 25, 2010: Grown-Ups

There's only one movie opening tomorrow, Grown-Ups (GRWUP), starring a bunch of guys who are usually very funny. I, however, don't find the trailer all that exciting. The stock has followed the classic bell-curve of summer blockbusters, peaking about a month ago, and tanking since. It's at H$102, down from H$136. Strike price is H$40, which would predict a stock price of H$108. The call, predictably, is sliding, down to H$1.22. The put is heading north, above H$4. It's going out on 3,200 screens. The CX derivative has been just steadily dropping, and is currently about H$114. So that has room to drop as well. Strike price for the Blockbuster Warrant is H$120, which is feasible, but unlikely. That's at H$6.

It's at only 10% on rottentomatoes.com. I couldn't find any review of it on aintitcool.com, so maybe Harry Knowles is completely ignoring it. Which would not surprise me. I'm not sure what this is about, other than some guys getting together when they are in their 40's, and acting immature. This does not have zero appeal for me - it has less than that. I don't hate Adam Sandler, I think he plays well in his niche, he knows what he's good at, and I've enjoyed some of his movies. But please, someone make this movie go away.

Stock: Short

Call: Short

Put: Long

CX: Short

BW: Short

Update Friday morning: It's down H$6. Whoops. So much for that idea.

Update Sunday night: I guess the message of the weekend is: don't underestimate Adam Sandler. He brought in $40 million, basically what most of his movies have made. Guess the market read him wrong as well. He knows what he does well, and he sticks to that, for the most part. Works for him, isn't working for me at this point.

June 22, 2010: Knight and Day

Knight and Day (KNDAY) is opening today, a little unusually for a standard blockbuster, but we're going to go with it. I almost forgot about it, so I don't have a lot of time for analysis, but I don't think it needs or deserves much, easier.

I've been looking forward to this, because Tom Cruise seems to be having a good time, and he seems to be funny. That's kind of a nice change of pace, although he always seems to be having a good time, and he was very funny in Tropic of Thunder. Stock, however, has been tanking, down to H$82, from a high of H$136. The strike price is H$35, with the call at H$2. Yeah, that ain't gonna happen. The put is above H$5. There's some residual optimism in that call. The CX derivative also has some residual optimism, still above H$90. The Blockbuster Warrant IPOs tomorrow. Reviews on RT are middling at best, with 54% fresh, and the positive reviews lukewarm. I like Tom Cruise. He's one of the movie stars that I put in the "decent actor but amazing performer" category. I always feel like I am watching Tom Cruise - he doesn't disappear into the character. But he's usually at least interesting to watch. And I like Cameron Diaz. I'll probably see this in the theater. But in a summer where audiences are quickly getting tired of formulaic action movies, I don't see a lot of reason for optimism.

Stock: Short

Call: Short

Put: Long

CX: Short

Blockbuster Warrant: Short, when it IPOs tomorrow.

Update Sunday night: Yep, it bombed.$20 million over the weekend, plus $7 million on Wednesday and Thursday. Not looking good for Mr. Cruise. Good thing he took a pay cut - supposedly he was paid $11 million upfront, rather than his usual $20 million. Doesn't look like he is going to get much of a percentage of the gross, either. Oh well. I'll probably still see it in the theaters.

June 18, 2010: Toy Story 3, Jonah Hex, Cyrus

We're settling in to summer, with a genuine blockbuster, a wannabe blockbuster that looks like it will be anything but, and a sort-of arthouse funky comedy.

First up, the blockbuster, Toy Story 3 (TOYS3). This is the franchise that started other trends - great movies from Pixar, computer animation, animated movies that look like they're for kids, but are really for adults. The anticipation is reflected in the stock price; it's $288, or about a $106 million opening. It's gone mostly up, quite steadily, although not quickly. There was buzz on this one for a long time. This isn't a holiday weekend, so there's no funky adjusting. It's not opening on a Thursday, although I am sure there will be midnight screenings tonight. The strike price is H$110, which is just about right, although just slightly higher than the stock price would indicate. The call (TOY3CA) is doing quite well, thank you very much, at H$5 and a half. The put, however, is also doing rather well, aiming at H$4. The CX derivative is at H$324, although it went through a very different trajectory, hitting H$358 before coming back down. Strike price for the blockbuster warrant (BWTOY3) is H$350. That's at $8 and change, so it's not busting out. The feeling I get is there is a lot of enthusiasm, and potential excitement, but also some caution. We've seen some bubbles burst of late. But we've also seen some surprises, notably last weekend, with The Karate Kid blowing away expectations. One of the cautionary tales was Shrek 4, although that should not have been that surprising, since the franchise was clearly wearing out its welcome, and the third movie was not that well received. Pixar hasn't really had a bad movie, or even a movie that was less than very well-received. This already has a 9.4 rating on IMDb, which is great. It has a virtually unheard-of 100% ratings on rottentomatoes.com. Unheard of, of course, except for the first two, which also have 100% ratings. So the two big questions of late: am I in a bubble? and Is there more potential on the upside or downside? would seem to be answered thusly: I seriously doubt I am in a bubble. The reputation of Pixar and these particular movies is very well-known. Extremely well-known. There isn't much downside. Shrek made $70 million, with mediocre reviews. About the only potential downside is that many members of the audience have severe sequelitis, but this is still a franchise with a reputation for originality. It's opening on 4,000+ screens. The studio is going wide, I'm going long.

Stock: Long

Call: Long

Put: Short

CX: Long

Blockbuster Warrant: Long

Next up is Jonah Hex (JOHEX). There are lots of reasons for uncertainty with this movie. It's based on a comic book that I have never heard of. I'm not clear on what, if any, superpowers the title character has. He is intentionally unattractive. The actor playing him is well-known and respected (Josh Brolin), but not in the opening-a-blockbuster-by-himself league. The hot actress (Megan Fox) may have already outlived her 15 minutes. The director, Jimmy Hayward, doesn't have much relevant experience, but he does have some good movies on his resume, ironically at Pixar. I find it strange that he was chosen to direct this, but I could be missing something. The stock is tanking, down to H$36 from H$103. That's really not good. The strike price is H$20, which, tragically, absurd by now. Call (JOHECA) is below H$1, while the put (JOHEPU) is above H$5. There are only 9 reviews on RT, but with that, it's at only 11%. CX derivative is at H$51, and I think it's that high only because it hasn't had enough time to drop. The strike price for the BW is H$80, which is just sad. It's at 19 cents, down 13 cents today. Almost makes you feel sorry for whoever still has it long. I can't find a single reason to be optimistic about this movie.

Stock: Short

Call: Short

Put: Long

CX: Short

BW: Short

Finally, we have the most intriguing movie of the weekend, at least from a box-office-potential perspective. Cyrus (CYRUS) is sort of a romantic comedy about a single woman, whose son interferes with her dating life. Sounds interesting. The trailer isn't the greatest - John C. Reilly plays a guy who seems a little socially awkward, but who ends up with Marisa Tomei. Jonah Hill plays her son, who proceeds to make life even more awkward. Could be brilliant, could be one of those movies that polarizes audiences. Stock is H$12, down from a high of H$22. Looks like the buzz has worn off a bit. There are no derivatives. It's doing quite well on RT, with an 82% rating. It's only opening on 4 screens this weekend, so it's obviously not adjusting. I'm going to call it anyways.

Stock: Short

Update Friday morning: Both stocks opening wide are moving in the direction I predicted: TOYS3 is up, while JOHEX is down, to H$30. If it wasn't so completely devoid of interesting qualities, I would suspect that would be a buy. But it's still an $11 million opening weekend, and there is some room between that number and zero. Maintaining all positions.

Update Sunday night: Mostly a positive weekend. Toy Story 3 came in at $109 million, almost exactly at the strike price. The stock technically adjusted down, but only H$5. Considering that it was at almost H$300, that's not a great variation. It's an obvious hold long to delist, Also technically, I was wrong on the options, although since it is so close to the strike price, I am going to wait for the final numbers tomorrow. I was right about the CX derivative, which adjusted down quite a bit. The BW is maintaining about the same price, so that's tough to call at this point.

I did nail JOHEX, which is apparently a God-awful piece of garbage. Hard to believe a movie with a strike price of H$20 came in at $5 million. I shorted it at H$79. It's currently at H$13, and I would bet it will delist around H$10. Made a fortune on that one.

Cyrus had a great weekend at its four theaters, so I am reversing position and going long on that one.

Update Monday night: Wow, that was close. Looks like it was a good call for me to wait until today to determine whether or not I was right about the TOYS3 calls. I was, in fact, right about both: it officially cleared $110.3 million, just barely above the strike price, right on the sweet spot. Ideally, it would have been perfect if I had shorted the call, but it cashed out on the plus side, so I'm all good.

June 11, 2010: The A-Team, The Karate Kid

We're going back to the 80's this weekend, with a movie based on a TV show from the Me Decade, and a remake of a classic from that era.

First up is The A-Team (ATEAM). Four Special Forces guys from the military (I'm not sure if we're supposed to know what branch of the military they are actually from) are convicted of a crime they didn't commit, so they go on the run and proceed to blow things up in the process of being cool. I have to admit that I am looking forward to this movie, regardless of how utterly nonsensical the plot turns out to be. If you look in the dictionary under "middle-aged white guy guilty pleasure," this would be right there. The stock has followed the classic wannabe-blockbuster bell curve, hitting H$149 before coming back down to earth - it's currently at H$100, or about a $37 million opening weekend. Strike price is $35, right on target, unlike last week's batch of mispriced options. Call (ATEACA) is at H$3, very much in sync with the stock price. Put (ATEAPU) is, however, also above H$3, so we have divided opinions in option-world. Critics aren't excited, with a 51% rating on rottentomatoes.com. The plot, I am sure, is largely irrelevant. But so was the plot in the original, as far as I can remember. The most memorable thing from that entire show's run was Mr. T's line "I pity the fool!" This is purely an exercise in style. It's going out to 3,500 theaters, but, more significantly, it doesn't have a lot of competition. CX derivative is at H$112, down from an absurd high of H$177. The strike price for the blockbuster warrant is H$120, a reasonable guess, but it's trading just above H$3, so not much optimism there. As an exercise in style over substance, it generates a lot of buzz, but not much deep affection. I would like to see it in the theater, but I won't be crushed if I don't. Time to ask the question: is there greater potential on the upside, or the downside? Looks like the answer is the downside - it might open above $35, but it's not looking likely. I'm more comfortable with something between $30 and $35.

Stock: Short

Call: Short

Put: Long

CX: Short

Blockbuster Warrant: Short

Next we have The Karate Kid (KFKID), starring Jackie Chan and Jaden Smith, son of Will and Jada Pinkett-Smith. I have to admit that I have never seen the original (it's on the list), but I am familiar with the idea. I don't have a lot of interest, but apparently a fair number of other people do: the stock is at H$94, right near the high, although it is down H$2 today. That's about about a $34 million opening. Strike price is very close to that, H$35. Call (KKIDCA) is, however, illustrating that fine difference between $35 and $34; it's below the IPO, at H$1 and change. The put (KKIDPU) is heading in the opposite direction, well above H$4. The CX derivative, as most do, is dropping from a high price, in this case, to H$97, down from H$110. Strike price for the blockbuster warrant is H$100, also reasonable, and also looking possible, but barely: it's at H$4 and a half. Critics are surprisingly positive, with a 58% rating on RT. That's not much better than the rating for A-Team, but the reviews feel better. There's a reason to remake The A-Team: explosions are more fun on the big screen. I have heard many complaints about remakes and sequels; it's why I started The Original Ideas Fund. I have a strong gut instinct that this movie, even if it's good, will be a victim of remake fatigue. Much more potential on the downside, methinks, even if it's going out on 3,600 screens.

Stock: Short

Call: Short

Put: Long

CX: Short

BW: Short

Update Friday morning: It's not looking good for either of these releases. KFKID is down H$3.50, and ATEAM is down H$6.50. Fairly obvious what to do. Maintaining all positions.

Update Sunday night: Well, that was quite the surprise. KFKID opened with $56, ridiculously above expectations. The A-Team opened at $26 million, which was expected only insofar as I was predicting an adjustment downwards. So what the heck happened? Someone suggested that if you don't show many movies to a particular segment of the audience for a while, they will respond really well when something finally shows up that they might like. I wasn't aware that the family movie genre was lacking in product, but that sounds about as plausible as anything. Still open for suggestions.

My mistake this week was not paying attention to the trend line for KFKID, and lumping it in with ATEAM as an 80's retread. KFKID did NOT experience the bell curve, it was still on a strong trajectory up. Yet another lesson learned.

June 4, 2010: Get Him to the Greek, Killers, Marmaduke, Splice

We have a bumper crop of mildly interesting movies this weekend, but I don't have a lot of time, so I am going to bang through these fast.

Get Him to the Greek (GHGRK). I have zero interest in this film. It's tanking, currently at H$53, down from H$75. A $20 million opening is possible, although the strike price is H$25, with the call about H$1, and the put above H$4. CX derivative is H$60 and dropping. Reviews, however, are very good, with a 74% rating on RT. OK, I'm a little more interested.

Stock: Long

Call: Short

Put: Long

CX: Short

Killers could be a great bad movie, but I'm not sure it could be a good movie. I love Katherine Heigl, I think she's incredibly gorgeous, but I'm not completely sold on her as an actress. And I am really not sold on Ashton Kutcher as an actor. But this looks like it could be fun. Stock (5KILR) is H$48, down from H$68, but up H$4 today, so it probably bottomed out. Strike price is the same at Greek, H$25, with the same results: call is dropping, below H$1, and the put is, again, above H$4. CX is also tanking. There are no reviews on RT, which means that it didn't screen for critics.

Stock: Short

Call: Short

Put: Long

CX: Short

I am utterly void of interest in Marmaduke (MARMA). From H$74 to H$45 - another slide. Another H$25 strike price, with the call barely above a quarter (H$0.31) and the put, again, above H$4. CX following same trajectory: H$74 to H$50. Only 3 reviews, so, also again, no critics' screening.

Stock: Short

Call: Short

Put: Long

CX: Short

Splice (SPLIC) is the one movie this weekend with some potential to break out. Stock is at H$26, but that's near the high of H$30. Strike price is H$10, with the call aiming at H$3, and the put just barely above IPO. No CX derivative. We could have a winner here.

Stock: Long

Call: Long

Put: Short

Update Friday morning: There are now enough reviews on RT to make a judgment about Marmaduke, and boy, it ain't pretty. 10%. That's right around complete bomb territory. Everything is down this morning, so maintaining the shorts on the dog movie and Killers looks easy. Splice is also down, although just a bit. It's had such a great run up, I'm not surprised that it's taken a hit. $10 million feels high for that movie, but it's going out on 2,400 screens, so I am going to take the risk that we will be pleasantly surprised. I'm also nervous about GHGRK, but the reviews are holding up. Maintaining all positions.

A middling weekend for a bunch of middling movies. My optimism for GHGRK was slightly misplaced; it opened at $17.4 million, adjust down just H$2, to H$47. Still, I was wrong on the stock. Killers opened below that, as expected, with $16.1 million. It actually adjusted up, albeit just barely, from H$42 to H$43. However, that's below where it was when I called shorting the stock, so I am going to give myself credit for that one. Marmaduke opened with $11 million, way, way below that H$25 strike price. Called that one perfectly. My nervousness about Splice turned out to be justified, it opened with $7.45 million. I got 11 out of 15 right, actually quite a nice record for the weekend, although I botched Splice. A large part of the reason for that record was the unfortunate strike prices, which made it easy to predict the options for 3 of the 4. My mistake on Greek and Splice was giving a little too much credit to some very insubstantial buzz. The average of the user reviews on Yahoo! for Splice is C+. OK, that sucks. The others are B to B+. Shorting all to delist.