January 8, 2010

Happy New Year! We're in the middle of Oscar season, which means good movies. But we're also in the early part of January, which usually means bad movies. Studios tend to release clunkers in January, because there are so many big movies left over from the holiday season. So having a release date in January is not a good sign for a movie. OTOH, it's possible that some studios are reversing this trend, because they know that the other studios are releasing dreck, so they competition is weak in that sense.



One possibly good movie is Leap Year (LEPYR), the usually wonderful Amy Adams in a romantic comedy. I buy her as a romantic lead. I'm not sure why a movie called "Leap Year" is being released two years before a Leap Year, but maybe they wanted to make it ASAP. The stock has been rocketing up lately, presumably after an actual release date was announced. It's up slightly today to H$32, near a high. Strike price is H$10, which makes perfect sense. The call (LEPYCA, one of the first of the new six-letter options) is treading water, but just barely. The put (LEPYPU) is marginally higher. On Cantor, the stock is up $3 today. However, the critics are savaging it, with only 18% approval on rottentomatoes.com. The expectations are quite low, so I am going to go long.
Stock: Long
Call: Long
Put: Short
Cantor: Long

Moving away from the cheesy romcom to the cheesy horror thriller, we have Ethan Hawke in Daybreakers (DAYBR). Again, lots of movement upwards, with a recent dip. A little more serious drop, from H$49 to H$39. Call (DAYBCA) is up to H$3, against a strike price of H$15. Put (DAYBPU) is above the IPO, but not much, so there are mostly good signs from the derivatives. CX on HSX is at H$46, down of late. It's marginally higher on Cantor, but about the same as the CX. Interestingly, it's doing well among critics, at 65% on RT. Vampires rock these days.
Stock: Long
Call: Long
Put: Short
CX on HSX: Long
Cantor: Long

Michael Cera, who is, oddly enough, becoming a movie star, stars in Youth In Revolt (YRVLT) as a both a young geek and his alter ego. If anyone can pull this off, I'll bet he can. Stock has been rocketing up, but is down today, to H$24, from H$27. This is for anyone who needs a coming of age story. Strike price is relatively optimistically set at H$10, with the call (YRVLCA) right back at the IPO price. Put (YRVLPU) is, what do you know, above the IPO, at two bucks and change. This has to be a good movie to actually make money. Fortunately, it looks like it might actually be quite funny; critics are liking it, with 68% approval on RT. My guess is that the studio knows it has a good movie, and is willing to let it build by word of mouth, and that it will take off as the holiday movies fade. The CX derivative is on basically the same tragectory as the stock. On Cantor, it's been really high, and is sinking from the ridiculous price of $45 or so. But it's now down to $29, so it might be time to reverse my short.
Stock: Long
Call: Long
Put: Short
CX on HSX: Long
Cantor: Long

I was a shade too optimistic, but not by much. Daybreakers came in almost right on the nose of both the strike price and the stock price, right at $15.0 million. The stock adjusted from H$40.61 to H$40.50, down a grand total of 11 cents. Let's pat ourselves on the back, traders! Leap Year came in at just over $9 million, adjusting down H$4 1/2. Youth in Revolt performed as we expect an indie coming of age comedy to, at $7 million, down H$2. I got a couple of puts right, and most other predictions wrong, but not by much. Pretty much a wash. We'll be back next week.

November 6, 2009: The Fourth Kind of Men Stare at Christmas Carols and Goats

We're back to a normal release schedule this week. We're also at the beginning of the holiday season, which means three things: blockbusters, Oscar-bait movies, and Holiday Warrants on HSX.

First up this week is "The Fourth Kind," (4KIND) about alien abductions. Looks good, could be interesting. Stock has been rocketing up, but is down H$3 today to H$30. Call (4KICA) is doing well against a H$10 strike price, although the put (4KIPU) is also doing reasonably well. It's going out on 2,450 screens, not a bad release. Critics are not impressed. I don't think there's a lot of room on the upside, but there's not much danger on the downside. Go with the flow.
Stock: Long
Call: Long
Put: Short

'Fourth Kind' Theatrical Trailer @ Yahoo! Video

Cameron Diaz stares in a thrilled called "The Box," (THBOX) about a box that does strange things. The stock is tanking. I like Cameron Diaz, but not enough to see her in a cheesy movie about some bizarre piece of squareness. The call (BOXCA) is optimistically above the IPO price, but the strike price is H$10, so the call, at H$2 and change, predicts an opening weekend around $12 million, while the stock, at H$21, is suggesting something more along the lines of $7-$8 million. The put (BOXPU) is more sensibly also above H$2. Critics are mixed, with 54% on rottentomatoes.com. I shorted this on CantorExchange.com several weeks ago. Guess what I suggest you do today.
Stock: Short
Call: Short
Put: Long

<br/><a href="http://video.msn.com/video.aspx?mkt=en-US&amp;vid=89c3732c-0168-404b-9c98-a6bc6dc0a5e8" target="_new" title="&#39;The Box&#39; Trailer">Video: &#39;The Box&#39; Trailer</a>

Easily the biggest release this weekend, and one of the biggest of the year, is A Christmas Carol (CAROL), a Walt Disney production of a Robert Zemeckis film, starring Jim Carrey. Oh, and by the way, it's by the classic by some guy named Charles Dickens. I like Robert Zemeckis, I think he's made some great movies, but I also think he is getting carried away with the technology on this one. The trailer looks amazing, with a motion-captured Carrey flying around London. Looks amazing, feels cold. Doesn't feel charming, which is supposed to be the point of the story. Stock is up today, but has been sinking of late. I expect that trend to continue. The call (ACCCA) is close to H$3, but has been dropping. It's against a H$45 strike price. I think $30 is more reasonable. The put (ACCPU), meanwhile, is rising. Critics are sort of in favor of it, with a barely fresh (61%) rating on RT. I short this on Cantor, too. It's going out on a bazillion screens, but I don't feel the love.
Stock: Short
Call: Short
Put: Long

'Christmas Carol' Teaser Trailer @ Yahoo! Video

In a great counterprogramming move, we have The Men Who Stare At Goats (MGOAT), about a US Army program to train psychic spies. Supposedly it's based on a true story. I am very much looking forward to this. Not sure how many people are, because it's really not a conventional movie. But boy do we need that in this movie season. Stock is down slightly, but has been rising steadily, and is in the mid-H$30's. The call (MGOCA) is a shade optimistically trading around H$3, against a H$15 strike price. That's possible, if a little unlikely. Given the uncertainty of this movie, considering it fits in the oddball-black-comedy genre, the put (MGOPU) is also flying high, around H$2 and change. It's going out on 2,200 screens, a good release for a movie like this. Critics are, again, just barely feeling the love - it's just barely fresh, at 60% on RT. Sounds like it's not as great as it could be, but still entertaining. This is one time I am going with my sense of taste and hunger for a smart, funny movie.
Stock: Long
Call: Long
Put: Long

'Men Who Stare at Goats' Theatrical Trailer @ Yahoo! Video

It was a good weekend here at TEQP.HSX - I called just about everything right. The only stock to come in above the strike price was 4KIND, which bagged $12 million. THBOX actually adjusted up, but it was so far down it didn't have much room to go down. I got the options right there. I got the stock wrong, but it only adjusted up by H$2, so it was basically a wash. MGOAT also adjust up, again just barely, by H$3. It missed the strike price, but not by much. I clearly made a mistake with my prediction for the put, because the call and put can't both be long. But I am going to go with my mistake. So I got the call wrong, and the put right. I nailed CAROL, within $1 million. I also nailed THBOX, even more precisely, but the margin of error is much greater with a stock like CAROL. I just don't think audiences are ready for a Christmas movie this far in advance of the holiday itself. Most people aren't even thinking of Thanksgiving yet! So I got 10 out of 12 right, and on the most important one, I bet against the market, and scored big. Like I said, a good weekend.