December 18, 2009: Did You Hear About Avatar?

There are only two movies out in wide release this weekend, but one is one of the most highly anticipated movies of this, or the last several, years.

But first, the sacrificial lamb. That would be "Did You Hear About the Morgans?" (MRGNS), starring Hugh Grant and Sarah Jessica Parker. I like Hugh Grant, I think he was great in Notting Hill. I'm not such a fan of SJP, but I can see the two of them as a couple in New York. Makes sense to me. The problem I have with them right now is that the stock is tanking big time. Just dropping like a rock. It's going out on 2,700 screens, which is a good wide release. But it's at only 10% on rottentomatoes.com. I have a strong feeling it's being released against Avatar for a couple of reasons. One, no other studio wanted to release a movie this weekend. Two, the studio probably assumes it's not going to great business anyways, so why even try? Three, it will be easy to blame the lack of box office on the competition. The strike price is H$20, which is absurd for a stock barely breaking H$30. The call (MRGCA) is dropping almost as fast as the stock, while the put (MRGPU) is heading skyward, about H$4 and a half. The CX derivative on HSX is still above H$40, wonder of wonders, but we can probably assume that won't last long. It's also dropping on Cantor, although it's still in the mid-30's. I like the trailer, but I have a feeling that all the good jokes are in those 2 1/2 minutes.

Stock: Short

Call: Short

Put: Long

CX on HSX: Short

Cantor: Short

Now, of course, we come to the big box office draw this weekend, a little movie called Avatar (AVATR), by some guy named James Cameron, who is one of the most successful directors of all time. The expectations are through the roof, and the backlash is almost as intense, even before the movie is released. Several people have pointed out that similar predictions of doom accompanied Titanic. The stock has been floating above H$200 for a few weeks now. Strike price is H$65, which correlates to a stock price of H$175. Call (AVACA) is, appropriately, through the roof. Put is in the nether regions. It's going out on a bazillion screens. Critics are loving it, and falling all over themselves to praise it. It's at 82% on RT. Strike price for the Holiday Warrant is H$200, and that's looking absurdly low. CX on HSX is at H$277, which is way high. The Cantor derivative has been floating between $220 and $250. There are various Nominoptions. Go long on most of those.

Stock: Long

Call: Long

Put: Short

Holiday Warrant: Long

CX on HSX: Long

Holiday Warrant: Long

Cantor: Long

Update Friday morning: Avatar is up H$9, and MRGNS is down almost H$3, so it looks like people are buying the hype about Avatar. James Cameron does have a rather spectacular track record. Morgans looks like a bunch of jokes in search of a plot. I have a feeling that is going to turn off most demographics. East Coast elites will get some of it, but they might also not appreciate being made fun of. Meanwhile, people in the heartland might be offended by the stereotypes of down-home folks with guns. I'm also not sure how it resolves. Are they going to fall back in love? So keep the short on that one.

Update Sunday night: Avatar didn't quite storm the gates as expected, but it still did $73 million, and apparently there was a major storm on the East Coast that thwarted some moviegoing. I'm still long to delist. Morgans, OTOH, was, in fact, a bomb, and presumably will be forgotten in a few weeks. I got everything right about MRGNS, while the only thing I got clearly wrong about AVATR was the stock. It dropped H$19, but that's just 10%, and I think it will make it up. CX on HSX is still a little high, but it's impossible to tell whether or not I was right about anything of the derivatives besides the put and call. Both of which I got right. So it was a good weekend.

September 25, 2009: Surrogates, Fame, Pandorum

Three simple one-word titled movies this weekend. HSX is experiencing technical difficulties as I write this, so I'm not sure I will be able to comment on how prices are changing today. Regardless, here we go. This week we see a continuation of last week's trend, i.e. movies that are suffering from a post-summer hangover. Not a great sign.

First up, at least in terms of potential, is Surrogates (SUROG), a futuristic sci-fi movie about a world in which human beings interact with each other through surrogates, or robots. A terrorist wants them to reconnect through good old-fashioned human flesh. I think we've seen something like this before, at least vaguely. An allegedly utopian future which is actually dysfunctional, and robots are somehow the problem. Not high on my list. Bruce Willis stars in it, apparently because he didn't have anything better to do. Stock has dropped from a high of H$69 to the current H$51. It's opening on 2,700 screens, which is a good solid release, but not as wide as possible. There are only 2 reviews on rottentomatoes.com, which suggests that it has not been screened for critics. That's a tad surprising, and not good. The strike price is H$25 ,which is absurd for a stock with this recent history and this current price. Call (SRGCA) is H$1.22, and I am surprised it's that high, although that could be because trading is frozen. Put (SRGPU) is at H$3.56, and even that is cheap. Comingsoon.net predicts $22 million. I think that's a little high. but $20 is certainly possible. Maybe it's even a good movie. Maybe.

Stock: Long

Call: Short

Put: Long

SURROGATES trailer in HD


Next up is a remake of a movie that went on to become a TV show and then a theater production that toured the country for years. So there's some brand awareness for Fame (FAME). The idea is certainly a known quantity; it's an excuse to see lots of hot young people gossiping, crying, fighting, flirting, and occasionally singing, dancing and having a great time being highly talented young people in New York. This stock has dropped as well, from H$45 to H$35. Strike price is H$15, not unreasonable. Call (FMECA) is at H$2 and change, while the put (FMEPU) is below H$2. It's going out on 3,000+ screens, and the studio (MGM) desperately needs a hit. But the reviews are savage, with only 25% on rottentomatoes.com. I found this tidbit interesting: the screenwriter has disavowed the movie. Things that make you say "Whoa!" Haven't heard that in a long time. In 1981, when the original came out, there weren't a lot of opportunities to see young people signing and dancing and gossiping. We don't have much lack of that these days.

Stock: Short

Call: Short

Put: Long

(Video is not currently available, I'll post it when it is).

Finally, Pandorum (PNDRM) is another futuristic sci-fi thriller (I know, "futuristic sci-fi" is just about redundant) about two guys on a space ship. They make a discovery that "could threaten the existence of mankind." Of course they do. What other plot twists would even interest moviegoers these days? Once again, it's tanking, from H$30 to H$20. Strike price is H$10, and, again once again, what seemed reasonable three weeks ago is now ridiculous. It's not going to make $10 million this weekend. Traders have realized this; the call (PNDCA) is below a buck, while the put (PNDPU) is above H$3. It's on 2,400 screens this weekend, and I think many of those screens are going to be very empty. It's not being screened for critics, but that makes perfect sense for this one. There are no reviews on rottentomatoes.com. $6-$7 million.

Stock: Short

Call: Short

Put: Long

'Pandorum' Theatrical Trailer @ Yahoo! Video

The September Slump continues, all three stocks adjusted down. SUROG did $15 million; not bad, but not good for a Bruce Willis action movie. FAME managed $10 million, barely avoiding the "bomb" territory, but also avoiding the "hit" territory. PNDRM did land squarely in bombsville, with a grand total of $4.4 million. I got almost all of my predictions right (8 out of 9!), I missed SUROG, but that only adjusted down H$5, so not a big miss. The one thing I did miss, which was not good, was actually adjusting my positions on HSX to match my predictions; I had gone long on all of these before, and was planning to change that after my analysis. But HSX had technical trouble, and I was called in to work on Thursday night, so I didn't have a chance to change. I worked until 1:00 am, and then slept in past 10, so I didn't get to short everything Friday morning. Gotta pay more attention to that alarm clock on Friday mornings.

9, I Can Do Bad All By Myself, Sorority Row, Whiteout

A mix of average and a little weirdness this week. Yesterday was 9/9/09, the perfect day to release a movie called "9." I forgot it was opening on Wednesday, sorry. So no predictions, although it looks interesting. Anyway, here's the trailer:

'Nine' Theatrical Trailer @ Yahoo! Video

One trend of this week is that all the movies are off from their highs. I'm not sure if we are in a post-Labor Day Haze, or if we are in that lull between summer blockbusters and awards season movies.

One slight exception is Tyler Perry's "I Can Do Bad All By Myself" (ICDBA), which is at H$70, fairly close to its high of H$75. I'm not sure what it's about, but the trailer, short and simple as it is, is very funny. I try not to be against Tyler Perry. HSX has set the strike price at H$30, a shade on the high side, but not reasonable. The call (ICDCA) is doing well, almost at H$3, but the put (ICDPU) is almost exactly the same price. H$70 suggests an opening weekend around $25 million, so the call looks overpriced. But it's otherwise a slow weekend, so Perry's timing might be impeccable. His last movie, "Madea Goes To Jail," opened with $41 million. Like I said, I don't like betting against Tyler Perry.

Stock: Long

Call: Long

Put: Short

'I Can Do Bad All By Myself' Teaser Trailer @ Yahoo! Video

There's yet another horror movie featuring hot young people being killed off; this time they're sorority sisters, hence "Sorority Row" (HSROW). As usual, I have no idea how to judge the appeal of these movies, so I am just going to go long, because H$27 feels cheap to me. Strike price is perfectly positioned at H$10. The call (SRWCA) isn't doing well, down slightly from the IPO, but the put (SRWPU) isn't all that great, either, at only H$1.35. The reviews are decent so far; it's at 63% on rottentomatoes.com, but that's only with 9 reviews. I'm going for the sweet spot between the two, right about $10 million. Someone isn't looking forward to this movie.

Stock: Long

Call: Short

Put: Short

'Sorority Row' Theatrical Trailer @ Yahoo! Video

Last and, unfortunately, quite possibly least, is "Whiteout," (WTOUT) a thriller/action something or other that takes in Antarctica. That's an interesting place to set a movie. Geography automatically lends a certain amount of drama, but also presents some problems, not least of which is a lack of visually interesting landscape, as suggested by the title. Also, it means that all of the characters are going to spend large chunks of screen time bundled up, i.e. hiding their figures, although apparently Kate Beckinsale, the star, takes a shower. Eye candy and all that. The stock is heading south, along with the plot (sorry, couldn't resist), down to H$25, from a high of H$43. Expectations are being lowered right along with the temperature. Strike price is H$10, again nice call by DMac. The call (WHOCA) is following the stock, below the IPO, with the put going in the opposite direction, coming close to H$3. I don't think this will open below $7 million, so I am going to go for the sweet spot again, just below $10 million for the weekend.

Stock: Long

Call: Short

Put: Short

Update Friday morning: Sorority Row and Whiteout are both tanking. I have a new rule that I don't change positions on Friday morning unless a stock moves by more than 10%. But, since they are both doing that, I am reversing positions and shorting both.

Update Monday morning: Well, I should have bet against Tyler Perry, or at least against the overpriced options; his movie debuted at $24 million, a solid opening, but nowhere near $30 million. The stock adjusted down, by about H$7, not a bad fall, but a drop that I missed. All the other openers adjusted down, as well. I got the stock and the call right on Sorority Row, but I was not pessimistic enough about, so I missed the put. Both that and Whiteout opened at about $5 million, way off the respective $10 strike prices. No sweet spots for any of them. But I got Whiteout exactly right, so I got 5 out of 9 this weekend. 9 the movie opened slightly below expectations, and I was wrong on my picks in my portfolio, but since I didn't write about those here, I am not counting them. So I was above .500 for the weekend, but not by much.

September 4, 2009: Gamer, All About Steve, Extract

We're in a bit of a lull, summer and the season of blockbusters is mostly over, but fall, and awards season, hasn't started yet. Labor Day should be a decent movie weekend, but remember that the weekend includes Monday, so stocks will adjust then, and the adjust is 2.2 x weekend BO (Fri-Mon) , not 2.7 x weekend BO (Fri-Sun).

First up is "Gamer" (CGAME), about a futuristic society that has some ultraviolent videogame/gladiatorial combat hybrid. Apparently real people are controlled by videogamers. I'm having trouble getting excited, and so is the market. The stock is way down, from a high of H$59, to the current H$42. If that's not tanking, I don't know what is. The strike price is H$20, which actually makes a little bit of sense, given that the multiplier is 2.2. But the call (GAMCA) is below the IPO, while the put (GAMPU) is at H3.43, which predicts an opening weekend below $17 million. Looks like not a lot of people are playing this Game. We don't know what critics are thinking about it, because apparently it wasn't screened for critics.

Stock: Short

Call: Short

Put: Long

Sandra Bullock is back in another romantic comedy, "All About Steve" (ABSTV). This time, however, instead of playing a highly competent but uptight and obnoxious yuppie, she's playing a woman who appears to be having a good old time in her own quirky little world. I like the trailer, and the stock has done reasonably well, but is down to H$31, from a high of H$42. Strike price is H$15, which is entirely plausible for a Sandra Bullock movie playing over a four-day holiday weekend. But the call (ABSCA) is down to H$2 and change, from above H$3, so it's sinking fast, while the put (ABSPU) is doing the exact opposite. And this is a major red flag: The current rating on rottentomatoes.com, with 34 reviews, is 0% fresh. Oh that's not good.

Stock: Short

Call: Short

Put: Long

'All About Steve' Theatrical Trailer @ Yahoo! Video

Another semi-indie comedy this week is "Extract" (EXTRC), starring Jason Bateman as some kind of guy working as a manger in a factory. I have to admit that I don't get the trailer, and I cannot see the appeal of this movie. This feels like it is being dumped. The stock hit a high of H$40, but is down to H$21 today. A drop of roughly 50% is really, really, really not good. Tanking. The strike price is H$15, again not unreasonable for a Jason Bateman movie opening over a four-day holiday weekend, but completely ludicrous with this stock price, which predicts a $10 million weekend if all stars align properly, and I doubt that they will. And the call (EXRCA) is at H$0.70, while the put (EXRPU) is closing in on H$4.

Stock: Short

Call: Short

Put: Long

'Extract' Teaser Trailer @ Yahoo! Video

Update Friday morning: All three are still dropping, so no changes to positions.

Update Monday morning: Congrats to me, I got every prediction right. ABSTV came in at the higher end of expectations. HSX gives it $14 million for the weekend, a smidgen higher than either Variety or Boxofficemojo.com. I have a feeling this is DMac or someone having a little bit of fun: at $14 million, the price adjusted to H$30.80. That's down from $30.81 - an adjust of literally one cent. But it's an adjust down, so I am giving myself credit for calling it correctly. Gamer did, in fact, tank, taking in all of $11 million for the four day weekend, way, way off of the $20 strike price, while Extract performed like an indie comedy with no discernible appeal or plot, bombing and coming up with only $5 million, even farther from its $15 strike price.

First Post! - HSX Week of July 31, 2009

This is my first post on my new blog, TEQP-HSX.com. That stands for Talented Earthquake Productions - Hollywood Stock Exchange. This is a blog about HSX, written by me, John Halbert. Talented Earthquake Productions was the name of my radio show in college, on WSRN, 91.5 on your FM dial, "radio that really shreds."

The purpose of this blog is to provide weekly advice about upcoming movie openings. That's it. I don't do long-term analysis, I don't look at IPO's, and I don't do bond charts.

But I do forecasts for the weekend. This one looks like a bit of a slow one. No summer blockbusters this weekend. First up is Aliens In The Attic (ANATC), a family sci-fi comedy about a group of aliens who invade a family's summer cottage. This looks about as deep as a Family Circus cartoon. But it should be fun for kids. The stock is at H$39 after a mostly upward trend, so that looks good. The strike price is optimistically set at H$15, and it doesn't look like it will have an opening weekend above $15 million. The call (ATCCA) is naturally trading quite low, currently at H$0.39, one of the lowest prices for a call I've seen in a while. The put (ATCPU) is trading around H$2, which makes sense. There isn't a lot of room for the put to sink, because it looks like this movie will make around $12 million this weekend. Boxofficemojo.com estimates that it will be released on 3,100 screens, so the studio seems to have some faith in it. There are no reviews as of yet on rottentomatoes.com. That might be a bad sign, because it might mean that the studio has not screened it for critics. Occasionally studios do that when they are worried that critical reaction will be so bad that it will have a strong negative influence. So that's something to watch for. I have to admit I liked the trailer. The price of the call is so low that I am going to go long, just on the off chance that it does better than H$15. It's a trivial cost, with a good possible upside. Like buying a penny stock. I am, however, already short the call at the IPO price, so I'm hedging.

Stock: Long

Call: Long (but only at this price)

Put: Long

Next up is The Collector (COLCT), a movie I had barely heard of before writing this post (although I do won 50,00 shares long). It's from Project Greenlight 3, which isn't a great sign, but the third iteration might be a good thing. It's a wide release (1,500 screens), but with no options, apparently because it IPO'd just two weeks ago. So apparently HSX didn't have time to plan for the options. That would mean that it's being released in a hurry, with little advance planning. Which might explain the lack of marketing. Still, the stock has risen consistently in those last two weeks, to H$14. Again, no reviews on rottentomatoes.com. So there is very little to go on except the stock price. Watch this tomorrow morning.

Stock: Long

The blockbuster-hopeful of the week is Funny People (FUNYP), starring Adam Sandler, Seth Rogen and Leslie Mann, directed by Judd Apatow. That should be a recipe for comedy gold, but the stock has tanked of late, way, way down from a high of H$120 to H$89 today. Looks like a classic case of an overhyped movie. Honestly, I don't see much humor in the trailer. The strike price is rather modestly set at H$30, so HSX could see the fall coming. I have a rule against shorting a call if there is a possibility of the opening going substantially above the strike price, which is the case here. First, the stock is highly volatile, and, second, I don't want to underestimate either Adam Sandler or Judd Apatow. Many people must be thinking like me, because the call (FUPCA) is at almost H$5. The put (FUPPU), however, is also doing well, at just above H$3. Seriously mixed signals we're getting here. The strike price for the Blockbuster Warrant (BWFUN) is H$100, and it's in positive territory, although not by much, at H$8. It is, of course, getting a nice wide release, on 3,000 screens. It's doing surprisingly well among the critics, and is at 71% on rottentomatoes.com. I'm just not comfortable with the pitch - I don't really have a sense of what this movie is about or how a movie about a guy who almost dies of a terminal disease is supposed to be funny. It sounds like Sandler and Apatow are growing up, which can only be a good thing, but that's also occasionally a painful thing.

Stock: Short

Call: Long

Put: Long

Update Friday morning: I'm posting this just after 10:00 AM Pacific time, a little too late to make any final adjustments (stocks that are opening today [and their options] halt trading at 10:00 AM Pacific). Still, I wanted to update these predictions. FUNYP is down slightly this morning, not really a surprise, and not really a strong signal either way. That kind of movement is mostly noise. It's down slightly at rottentomatoes.com. to 66% the last time I checked. When checking on rottentomatoes.com, it important to look at the substance of the reviews. How positive are the "fresh" reviews, and how negative are the "rotten" reviews? If a movie is fresh and reviews are glowing, with even the rotten ones expressing some positive sentiment, that's a strong signal. With this one, however, even the fresh reviews are very soft - they seem to say that's it's not a great movie, but it's not bad, so we'll give it a "fresh" rating. So this is a weak 66%. I'm still not optimistic about it. At the end of the day, a movie has to answer one question in a potential ticket-buyer's mind: will this be worth $10 (or more) of my money, and 2-4 hours of time? I don't see that here - I don't see any "hook" that will get audiences in. There will be a certain number of people who will see it because they are Adam Sandler/Judd Apatow fans, and there will be a certain number who will see it because they want to see a movie, and this looks like the best for them. But to make $30 million this weekend, it has to bring in the people who are wavering, and who have to be convinced. I don't see that happening.

ANATC is down substantially, more than H$3, a worrying sign. However, it's also possible that this is more noise - it's gone up quite a bit recently, so profit-taking is normal. I must admit to a mistake in my calculations, however. I predicted it would make $12 million this weekend, but when long with a price of H$39. But a $12 million weekend would translate into a price of about H$32. So I should have shorted it.

Not a good weekend at the movies, all three adjusted down. FUNYP was the biggest loser, dropping H$23. ANATC, as I almost guessed, dropped, only bagging $7 million and change. Good luck with the career, Ashley. COLCT didn't meet its very low expectations, so it dropped, but it didn't have far to go, so it only lost about H$3.

There were 7 securities up for grabs this weekend. I missed out on two of the stocks, but I nailed all 4 of the options (I'm not counting my hedge on the call for ANATC), so I got 5 out of 7, plus the Blockbuster Warrant for Funny People. Not bad, could be better.