Week of August 6, 2010: The Other Guys Step Up

I am posting this late because my Internet service is down at home. So this is a Friday morning update, as well as a regular post. We have two movies opening this weekend, both with less-than-blockbuster expectations.

First up is Step Up 3D, third in the dance movie series. Full disclosure: I haven't seen any of these movies, and probably won't be seeing this one. Fuller disclosure: the director, Jon Chu, went to USC film school around the same time I did. I don't know him, but we have friends and acquaintances in common. Stock is doing reasonably well, at H$44, up H$1 and change today. That's below the high of H$50, but not much. There hasn't been much of a dropoff with this one, which is good. Strike price is H$15, which is exactly right. Call is at H$2 and a smidgen of change, so there's a bit of optimism there. Put is at exactly the same price, H$2.13, but is down, whereas the call is up. So we see some trending upwards. No Blockbuster Warrant, although I'm sure it will do much better than one of the movies that DID have a BW, Jonah Hex. Critics are not enthused, with only a 50% rating on RT, and even some of the positive reviews damning with faint praise. But this sounds like pretty much what you expect: an excuse for lots of hot young people to move in really exciting ways. It's going out on 2,400 screens, also exactly as expected. Fullest disclosure: the only person I know who saw the first one was my Mormon aunt in Utah (who has 8 grandchildren). She loved it. I'm not betting against my Mormon aunt or my fellow USC alum.
Stock: Long
Call: Long
Put: Short

The other movie opening this weekend is The Other Guys (OTHRG), starring Marky Mark Wahlberg and Will Ferrell as two bumbling cops. It's been done before, but it's also good to see Will Ferrell back doing what he does best. Stock is at H$86, down from a high of H$125 - yet another victim of overhype. Seen that a few times this year. It's down this morning, but only 50 cents. Strike price is H$30, also dead-on. Nice to see HSX nailing that. Call is at $3, heading towards H$4, while the put is below H$2 and heading farther south. Optimism in the options. Critics are quite enthusiastic, which is an excellent sign, with 79% approval on RT. It's going out on 3,600 screens, a great wide release. The only competition is Dinner For Schmucks, which does not seem to have as much momentum. I know many people who would love to see a great comedy, including me.
Stock: Long
Call: Long
Put: Short

Update Sunday night: Just about nailed this one. Not quite, but close. The Other Guys came in at $35 million, and adjusted up H$10, to H$96. Step Up 3D brought in H$15.5 million, almost exactly the strike price. It adjusted down H$3, which is trivial. So I got all of the options right, although I would have made more money shorting the call on STUP3. Still, it was a good weekend.