Thursday, August 26, 2010

August 27, 2010: The Last Exorcism, Takers

It's the dog days of August, and that means slump time. Dumping time. Get rid of all your trash before the fall starts. So we're not real excited about the movies coming out tomorrow. But we're going to do our best to evaluate them.

The first shall be last, and the last shall be first. Thus the first movie up this week is The Last Exorcism (LXORC). It's a horror movie about a priest and an exorcism. Always good for some scares. The stars - such as they are - are total unknowns, as is the director. At least they are all total unknowns to me. Of course, this may be because I have zero interest in horror movies. I do have an interest in this stock, which has been climbing quite nicely and steadily. It's at H$40, down just a bit from the high of H$44. Strike price is H$10, which is absurdly low, given the stock price. So we have a situation once again where the options are not hard to predict. The call is at H$6 and change. Haven't seen that for a while! The put is at H$0.57. Haven't seen that in a while, either! It's going out on 2,800 screens, which is a good solid release. Critics are pleasantly surprised, with a 65% rating on All signs point to some good potential on the upside, like $14-$16 million.
Stock: Long
Call: Long
Put: Short

Not quite as many people are taken by Takers (TAKER) the other big opening this weekend. This does have a cast of recognizable stars, but not really anyone who can open a movie. Didn't we just see Matt Dillon in a heist movie? Didn't we just see Zoe Saldana in a cheesy action movie? Stock is at H$28, and the strike price is, again, H$10, although this time that is dead-on. The call is slightly outpacing the stock - it's closing in on H$3. The put is closer to the stock, just below H$2. It's going out on 2,200 screens, so the studio is playing it a little safe. Critics are not enthused, with just a 29% approval on RT. Not expecting any surprises here, in either the movie itself, or the box office. I'm guessing it has some marginal room to move on the top, but I'm looking for the sweet spot on the options, right around the strike price, at $10 million.
Stock: Long
Call: Short
Put: Short

Both stocks are up this morning a shade over H$3. Looking good for the last week of August. Maintaining all positions.
Two nice surprises this weekend. Both movies opened at aboout $21 million, way above the strike prices, and, for Takers, way above the price predicted by the stock, although the momentum was clearly up. The only prediction that I missed was the call on Takers, but it's always very risky predicting the sweet spot. Otherwise a very good weekend.

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