Despicable Me looks like fun. Great title. Great trailer. Stock is at H$100, near the high of H$109. Strike price for the options is H$35, right on target. Call (DESMCA) is at H$4 and a half and rising, a good sign. Put (DESMPU) is below IPO and sinking, another good sign. It's going out on 3,400 screens, a good wide release. Critics are nicely positive, with an 87% rating on rottentomatoes.com. There isn't a CX derivative, since those are being cashed out. The strike price for the Blockbuster Warrant is H$120, with the price currently at H$11 and rising. All the signs are looking good, except for the fact that it's down today. But that could be just noise. I'm intrigued enough by the story to want to see it myself.
Stock: Long
Call: Long
Put: Short
BW: Long
Predator, OTOH, is not looking so good. Stock is at H$70. It's up H$2.50 as of this writing, but down from a high of H$114. That's not good. This also has a strike price of H$35, which is not terribly realistic. The call (PREDCA) is tanking, below H$1.50. The put (PREDPU), meanwhile, is soaring, aiming at H$5. Exactly the opposite of DESME. It's going out on 2,600 screens, not quite as many, but a decent release. Critics, somewhat surprisingly, are positive, with a 73% rating on RT. I know next to nothing about this, since I didn't see the original, and have no intention of ever doing so. But it sounds like the hype has been washed out of the stock price, and we are back in somewhat reasonable territory. Blockbuster Warrant strike price is H$100, and it's about H$2 and change. Which makes a fair amount of sense. So we're looking at about a $30 million opening weekend with this stock price. That would put it just ahead of The A-Team, and it sounds like this is a better movie.
Stock: Long
Call: Short
Put: Long
BW: Short
Update Friday morning: Despicable Me is doing well, up H$3 today, so I am maintaining those positions. However, Predators is down H$8.50, which prompts a rethink of holding the stock long. In a situation like this, I ask myself if there is any reason to bet against the market, and I can't think of one. Sequels and remakes and reboots are not doing well this summer. The biggest name in the cast is Adrien Brody. He's a fine actor, and he's probably fine in this movie, but he's not Arnold and I don't see him as a great lead in an action movie. Reversing position on the stock, shorting it.
Update Sunday afternoon: Despicable Me proved to be a solid performer, with $60 million this weekend, while Predators came in at $25 million. This is very similar to what happened with A-Team and Karate Kid: the family film outperformed expectations by a huge margin, while the action adventure movie came in either below expectations, or just barely above seriously diminished expectations.
I was wrong on the stock for PRED3, which technically adjusted up, but only by H$5. Otherwise I got all of the predictions right this weekend. Anyways, PRED3 is certainly a short to delist.
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