October 1, 2010: Case 39, Let Me In, The Social Network

We have three movies opening this weekend, two horror movies and a movie about Facebook.

Renee Zellweger stars in Case 39 (CAS39), a horror movie about a case worker whose 39th case is a little girl who isn't quite as innocent as she seems. The trailer scares me, but since that isn't hard to do, that isn't saying much. I haven't heard much about this movie, haven't seen any marketing, but the stock is skyrocketing like I haven't seen in a long time. It's up several hundred percent in the last couple of months. THAT'S interesting. It's at H$12 and change on Friday morning. There aren't even options, that's how depressed the stock was until recently. RT score is 23%. So it looks like the studio had an opportunity to release it, so they grabbed it, hoping to make some money. I have a feeling it's had a great run, but the hype is peaking.

Stock: Short

Let Me In (LTRON) is a remake of a Swedish vampire movie called Let The Right One In, which apparently was quite successful. Halloween is right around the corner! This is not doing quite so well, and the stock is tanking, down to H$31. Strike price is H$15, which seems optimistic today, and the call (LTMNCA) is H$1.35. Put is at H$3.43. Critics are quite enthusiastic, with an 83% rating on RT. Now that some hype has been wiped out from the stock price, I see more potential on the upside than the downside. But I'm not optimistic that it's going to make the strike price.

Stock: Long

Call: Short

Put: Long

Then there's this little movie called The Social Network (SOCIL), about some dweeb who decided that he wanted to help people make friends. Such a good idea! We all know and love Facebook, don't we? But how many of us will love the movie about it? Stock rose quite steadily to the low-H$90's - high H$80's, which is where it is parked now. Strike price is nicely priced at H$30, and the call (SOCICA) has lots of friends, and H$3.43, while the put (SOCIPU) does not have quite as many friends, but is not doing too badly, either, at H$2.91. We have mixed signals here. Except from the critics, who are almost universally enthusiastic, raving and giving it a 97% rating on RT. This has the potential to be the kind of movie that feel like they have to see to be part of the cultural conversation.

Stock: Long

Call: Long

Put: Short

Well, it wasn't a great weekend, either at the box office, or here at TEQP-HSX. The Social Network didn't soar quite as I expected, only picking up H$23 million, and adjusting down H$18. Case 39, the one movie I didn't think was going to do well, actually did marginally better than expected, with $5 million in the bank, and actually adjusted up a bit, to H$14. From the numbers being reported now, it did better than the other horror movie opening this weekend, Let Me In, which had a lot more hype. That only did about $5.3, and it adjusted down quite a bit, from H$30, to H$14, i.e. by more than half. Thank goodness I got the options right on that one, or I would have gotten everything wrong this weekend. This a humbling experience pretty much every week.

September 24, 2010: Wall Street, You Again, Legends of the Guardians

We're out of the post-summer slump, but not quite in Oscar season, so we have some maybe-sorta quality movies. At least this isn't a dumping-ground weekend.

Gordon Gekko, star of Wall Street, is back, and Michael Douglas looks like he's having a heck of a good time. There are a couple of young people starring with him, Shia Labeouf and Carey Mulligan, presumably to make this movie more appealing to young people who are more familiar with them than Oliver Stone's late-80's movie. The hype around this movie was, of course, a bit much, and it has, appropriately, tanked in the last few weeks, down to H$68, from H$90. Strike price is dead on, at H$25. Call is doing quite well, at H$4 and change, while the put is tanking, down to H$1 and a half. But we have a problem here: movement on the options is strongly up, but momentum on the stock is down. Critics are mostly positive, with a 56% rating on RT. However, that's not quite a fresh rating. I'm not quite sure what the point is here, and if I am confused, it's a fair bet other people are, as well. Watching the trailer, I'm sensing a lot of drama, but I don't know where it's going. I'm going to wait to see if this is worth watching. I'm betting against the market, but that's where the real money is.

Stock: Short

Call: Short

Put: Long

Rarely have I seen a stock tank as sharply as You Again (UAGAN). This is sad, because it's a mostly female cast, with some great actresses, including Sigourney Weaver and Jamie Lee Curtis. And the great Betty White. It went from H$52 to H$36 in a week. Wow, that's bad. Strike price was set at H$20, which made perfect sense a couple of weeks ago. Today, it's absurd. Call is below a buck, and the put is aiming at H$5. Critics are brutal, with a 17% rating. Calls are not hard on this one.

Stock: Short

Call: Short

Put: Long

One movie I wasn't anticipating, but showed up on my radar when I saw lots of posters for it at the mall, is Legends of the Guardians: The Owls of Ga'Hoole. The title sounds faintly ridiculous to me, but apparently it's based on a famous children's book or books. The stock isn't doing all that well, down to H$52, from H$67. It looks terribly cliched to me. Also, how exactly are we supposed to tell owls apart? They don't have particularly expressive faces. But I'm sure there's lots of great aerial combat. I was also surprised that it's directed by Zack Snyder, who made 300. Strike price is H$20, which is dead on. Call is doing well, up H$3, while the put is below a buck. Critics are not very enthusiastic, with only a 50% rating on RT. Maybe I'm not in a good mood (which is entirely possible), but I'm betting against the market again. I just don't see the appeal.

Stock: Short

Call: Short

Put: Long

Update Friday afternoon: It's past halt time, so this is irrelevant, except as a matter of record. I reversed position on Wall Street, because it was up H$4.50, which is a major move. I didn't have time to reverse positions on the options, which may be a bad mistake. I also have a feeling that there is more potential for loss on the upside than on the downside.

Update Sunday night: Well, damn. My original instinct on Wall Street was right: it opened at only $19 million, dropping H$20. But I was right about the other two, and I was right about the options for Wall Street, but only because I didn't have time to reverse positions. So I was right about 8 out of 9, but wrong about the biggest one. Which I was right about originally.

February 19, 2010: Shutter Island

There's only one movie opening this weekend, but it's a doozy: Martin Scorsese' Shutter Island (SHISL). This movie has something of a tortured history already: it was supposed to be released last year, just in time for Oscar season, but the studio, Paramount, decided that it was a little short of cash, so they decided to wait.

That was probably a good call. In the meantime, the suspense has only built. The marketing has been relentless, to the point of overkill. But their is still some sense of excitement about this movie. It is, after all, Martin Scorsese. I'm not a huge Scorsese fan - I think he's made a few too many movies about brilliant but self-destructive white guys - but he is quite the craftsman. Apparently the story is quite a tough one to tell, but supposedly he pulled it off. Critics are very divided, with a 63% approval on rottentomatoes.com. This sounds like a love-it-or-hate-it experience. It's going out on almost 3,000 screens, which should be more than enough.

The stock is right around H$100. Strike price is H$40, which translates to a stock price of H$108. But the call (SHISCA) and the put (SHISPU) are above H$3, although the put is close to H$4. So signals are mixed. It's clearly going to have a good opening weekend, but the question is how good.

There isn't any competition this weekend, and not much competition among movies currently out. There aren't any intense psychological thrillers out there. The level of interest on IMDBPro is extremely high. Scorsese's last movie - which also starred Leonardo DiCaprio - was The Departed, which opened to $26 million. Mystic River, another psychological thriller from a Dennis Lehane novel, made $156 million worldwide. This film is pretty much a known quantity. You know what you're going to get with a Scorsese movie. The people who like it are going to love it. OTOH, there will be a fair number of people who don't like it, or who don't get it.

The key here is the level of interest. The buildup has been pretty intense. The stock is hitting its high on HSX, and the CX derivative is right around the same price. The pros are that it's a Martin Scorsese movie, the marketing has been very intense, and it's quite probably a very good movie. The cons are that it's a Martin Scorsese movie, and he doesn't make happy movies. Also, it sounds like it's a bit long. But there is no question that it will be very intense.

Last weekend, Valentine's Day blew away all expectations in part, I think, because many people wanted some kind of escapism. I think this will attract a number of people who just want to know that they are going to see a good movie.
Stock: Long
Call: Long
Put: Short
CX on HSX: Long
Cantor: Long

Update Friday morning: Well, the signs are a little different than they were yesterday. The call is down, to H$2 and change, while the put is about double that. So $42 million is not looking realistic. The stock was down as much as H$4, but rebounded, and halted down H$2, to H$92.25. That's a $34 million opening weekend, which is in line with the put. The CX derivative is down H$3, to about H$94, so it's sending the same signal. On Cantor, it's down $5, to $100. Dampening expectations all around. I reversed position on the call, so I am now short the call, but I kept my short on the put, because I think it will do somewhat better than $36 million. It's still doing quite well among critics and users, with an A- on Yahoo, and an 8.5 rating on IMDB. It feels like more people are getting it than are not, although the people who don't get it or don't like seem to have the stronger opinions. I'm only long 5 shares on Cantor, so I am prepared for some surprise on the upside, but not much. I don't think the movement either way is going to be very dramatic.

Update Sunday night: Well, I nailed it. Damn does that feel good. I got everything right. It cleared $40.20 million this weekend (that's before whatever the adjustment is tomorrow). Talking about hitting the sweet spot. Wow. The stock adjusted from H$92 to H$108, a nice adjustment upwards. The CX derivative is currently at H$96, so the market is already assuming that it will drop, and delist below the adjust. I disagree, I am staying long to delist. And, of course, I got the price right on Cantor.

January 15, 2010: Book of Eli, Spy Next Door, Lovely Bones

The three movies this week are, hopefully, a bit better than the standard January fare. At least two of them look that way.

First up is Denzel Washington wandering a post-apocalypse wasteland in Book of Eli (BOELI). He's apparently trying to save the world by carrying a Bible somewhere. However, the trailer is mostly just him kicking ass in earth tones. Stock is at H$80, down from a high of H$97. This one has not suffered from lack of hype. The strike price is H$30, and the call (BOELCA) is at H$3 and some, but that's down for the day. The put (BOELPU) is above H$2, and also down today, but not by much. An H$30 strike price translates to H$81, almost exactly where it is right now. So the call is probably too optimistic, with a prediction of a stock price of H$90. The Cantor option on HSX is at H$89, but it has been extremely volatile, and that's also down from a high of H$97. It's going out on over 3,000 screens, which is good. But the reviews are not good, at only 44% on RT. I think Avatar will still be sucking up some action movie oxygen. On Cantor Exchange, it's at $86, down from a high of well over $100. None of the signs are good.

Stock: Short

Call: Short

Put: Long

CX on HSX: Short

Cantor: Short

Jackie Chan is back in action in The Spy Next Door (SPYND). I'm sure it's a standard Jackie Chan movie, but with little kids. You know what you get with Jackie, and it's usually at least OK. He's not a young man anymore, but he still brings it. Stock is at H$31, down from a high of H$35. Strike price is H$15, which may have made sense a while ago, but doesn't now. Call (SPYNCA) is right at the IPO price. Put (SPYNPU) is above IPO, which makes sense. It's going out on almost 3,000 screens, but the reviews are atrocious, at only 7% on RT. Boy, that's horrible. The CX option on HSX and the option on Cantor Exchange are both in the mid-30's. Reviews that savage mean that, quite simply, it sucks. Even little kids occasionally have good taste.

Stock: Short

Call: Short

Put: Long

CX on HSX: Short

Cantor: Short

Finally we have the most interesting - at least in terms of the backstory - movie coming out this weekend, The Lovely Bones (LVBON). Peter Jackson, he of LOTR fame, is trying his hand at serious drama. Based on a best-selling book by Alice Sebold, it tells the story of a 14-year old girl who is murdered, but doesn't quite make it to heaven. It's been in limited release for a month, and reviews have not been kind. The stock is at H$27, down from a high of H$60. Quite the drop. There are no options, since it's been out for several weeks. It's at 35% on RT, and many of the reviews are brutal. It's expanding from 57 screens to over 2,500. The CX derivative on HSX is still at H$40, but has dropped precipitously. On Cantor, it's in the mid-30s'. The book sold 15 million copies, so I think there is an audience for the movie still out there, even if it's not very good. The expectations are so low at this point that I think they will be easily beaten.

Stock: Long

CX on HSX: Short

Cantor: Long

Update Friday morning: Book of Eli is down a bit, not much, so my prediction looks good. Same with Spy Next Door and Lovely Bones. Jackie Chan's latest is down H$1.25. Not much, but it confirms the trend. Lovely Bones is up H$3.75, also confirming my suspicions that it will bounce back from terrible early reviews. Maintaining all positions.

A fairly good weekend for me, and mostly in line with expectations. I was off on BOELI, but not by much - it made $38 million, but the multiplier was 2.2, because of the holiday weekend, which I didn't take into account. It adjusted up H$3. SPYND brought in $13 million, so I was right about that one. Lovely Bones did much better than expected, with a take of $20 million. It adjusted way up, from H$31 to H$45. So I basically got two out of three right.

December 11, 2009: The Princess and the Frog, Invictus, and Lovely Bones

We're finally getting into the swing of things in the holiday season, with three good, potentially great, movies opening this weekend. Oscar season is here!

First up is a classic Disney movie, told in classic Disney hand-drawn animation.The Princess and the Frog (FROGP) is a variation on the fairy tale about a handsome prince who is turned into a frog, and needs to be kissed by a princess to turn back into a prince. One difference this time is that the princess is African-American. Disney is taking a bit of a gamble by going old-school with the animation, but I wouldn't bet against Disney and animation. The stock has been progressing nicely, and is at H$87. The strike price is nicely set at H$30, and the call (PFRCA) is, as expected, well above the IPO, currently at H$4. Put (PFRPU) is, as expected, below IPO, currently about H$1.50. Strike price for the Holiday Warrant (HWPRF) is H$100, and the price there is also above the IPO, about H$16. So far, so good. Where it gets interesting is the CX and Cantor derivatives. CX on HSX is about H$107, or 20 points higher than the stock. On Cantor, it's still a little higher, about $111. It's going out on 3,300 screens, a good wide release. It's scoring 83% on rottentomatoes.com, with lots of critics weighing in (it was released in LA and NY last week). It's already made $2.6 million. The last thing you should do is best against Disney animation. It needs to do $32 million to meet the HSX price, and $41 million to meet the Cantor price. WALL-E, which did not have a story anywhere nearly as easily sold to small children, opened with $63 million. $50 million is entirely possible for the Princess and her frog.
Stock: Long
Call: Long
Put: Short
Holiday Warrant: Long
CX on HSX: Long
Cantor: Long

Coming down to earth, we have Morgan Freeman and Matt Damon staring in a Clint Eastwood movie with a weird name, Invictus (INVIC). That's a great combination right there. Throw in Nelson Mandela and a world championship in a very tough sport, and you've got a powerful combination. There's another movie out right now that combines race and sports that has been an absolute smash - The Blind Side. I am currently realizing a 200% profit on that on Cantor. Apparently when Morgan Freeman met Nelson Mandela, Mandela told him that he wanted him, Morgan Freeman, to play him in a movie. Morgan Freeman played a black American president years ago, so playing Nelson Mandela is a natural progression. Where do you go from playing an American president? Nelson Mandela is about the only step up. I love the trailer for this movie. There's another trailer with a scene of Matt Damon rallying his troops after a defeat. Based on just that clip, I think Matt Damon is a front runner for Best Actor. The market is not quite as optimistic as I am about this. The stock is at H$43, down from a high of H$66. The strike price is H$20, which should seem unrealistic. The call (NVCCA) is dropping, and is barely above H$1. The put (NVCPU) is doing well, aiming at H$4. Strike price for the Holiday Warrant (HWINV) is H$70, and that's dropping, down to H$5. CX derivative on HSX is down to H$57, from the same high as the stock, H$66. On Cantor, it's below the CX price, down to H$52. All signs, in other words, point down. It's going out on 2,150 screens, a good release, not fantastic. But there's one very good sign: it's at 82% on RT. I think it's sinking for two reasons: 1, it's about rugby, which most Americans are not familiar with, and Obama's popularity is sinking, and many people are a little tired of inspirational rhetoric about a black president. But this also sounds like a damn good movie, Clint Eastwood has become a great director, and even if Americans don't understand rugby, they sure as heck understand winning. I'm willing to bet that lots of the women who are seeing The Blind Side don't particularly like football, but they get the story. I think that will be the case here.
Stock: Long
Call: Long
Put: Short
Holiday Warrant: Long
CX on HSX: Long
Cantor: Long

Last is a movie that is going into limited release this weekend, and going wide in January: Lovely Bones (LVBON). I have to be honest: this movie totally confounds me. It sounds incredibly depressing, but I've heard rumors of it being very highly anticipated, particularly by high school students. The stock is sinking, down to H$41, from a high of H$60. There are no options on HSX, and I'm not sure there will be. Strike price for the Holiday Warrant (HWLVB) is H$70, and that's sinking like a rock, down to H$7 or so. The CX derivative on HSX is down from H$69 to H$64. On Cantor, meanwhile, it's at $83, down from a high in the $90's. The reviews are in, and they're not good: it's at only 50% on RT, with 40 critics weighing in. Moreover, the good reviews are tepid, and many of the negative ones are strongly negative. It's only on 3 screens this weekend, and goes wide January 15th. That gives us lots of time for word of mouth to spread, and it doesn't look like it's going to spread well.
Stock: Short
Holiday Warrant: Short
CX on HSX: Short
Cantor: Short

Update Friday morning: INVIC and FROGP are both up about H$3, a good sign. It looks like INVIC might not make the strike price, but I am expecting some upside. LVBON, OTOH, keeps sinking. It's still in the high $70's on Cantor, which confuses the heck out of me. One thing I thot of yesterday writing this post is that I was highly optimistic about Peter Jackson's King Kong. I bet on Intrade that it was going to open above $100, and it opened with $66 million. We also have to remember the Wachowski brothers syndrome: they made a great movie, The Matrix, but followed it up with some real duds. So Peter Jackson is still flying on the success of the LOTR movies, but he's human. I thot King Kong was a little too ridiculous, and I haven't heard anything about it since the release. Clint Eastwood, however, has a great track record as a director. So does James Cameron, so I am very much looking forward to Avatar.

Update Sunday night: Sigh. Totally wrong on both movies.FROGP adjusted downwards, to H$77. Not a big drop, but $25 million is not the $50 million I was predicting. Can't believe I predicted something so way off from the market's prediction. INVIC continued its downward trend, only making $9 million this weekend. I think it will bounce back, but that's a long way from the $60+ that the Cantor option was trading at. Maybe it isn't a good movie to release during the holiday season. I also noticed this weekend that both of these movies star black characters (the Princess and Nelson Mandela). That would be black as opposed to African-American, because Nelson Mandela is not an American. Lesson for the week: respect the market.