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 rottentomatoes.com. 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.

August 20, 2010: Taking a break

I am taking a break from predicting movies this weekend, because it's the middle of August, which means that we are past summer blockbuster season, but not yet into the holiday/awards movies season. So the movies coming out this weekend are not terribly interesting. And, honestly, I just don't want to spend any more time than I absolutely have to about a movie called "Vampires Suck." When one of the more interesting movies opening on a weekend is a Jennifer Aniston romcom that is tanking badly, you know it's bad. Best of luck to Emma Thompson, but, since I don't have small children, I don't have much interest in Nanny McPhee. See you next week.

August 13th, 2010: Scott Pilgrim Eats, Prays, and Loves the Expendables

We have three very different movies opening on this Friday the 13th.

First up is The Expendables (XPNDB), just about the purest example of an action movie we've seen in a while. Absolutely no pretense here: this is about tough guys, fists, knives, guns and explosions. Plus the occasional damsel in distress and snarky put-down. Stock has been extremely volatile, currently resting at H$85, up 50 cents for the day, but down from a high of H$112. No gently sloping bell curve here, the chart looks like an EKG. The strike price for the options is H$25, which predicts a stock price of about H$67. So that seems low. Call is at H$5 and climbing, put is below a buck. It's going out on 3,200 screens. Critics aren't very excited, with only 44% on rottentomatoes.com, but that's not a surprise. No Blockbuster Warrant, probably because there isn't much time until the BWs delist. It's old-fashioned, but I'm sure it will have a certain appeal. Needs H$31.5 to meet the stock price. I'm optimistic, but I am going to keep an eye on this tomorrow.

Stock: Long

Call: Long

Put: Short

Julia Roberts is back in a starring role in a movie that may or may not be a romantic comedy. It sure looks romantic, but I'm not sure it's a comedy. Eat Pray Love (ETPLV) is based on a book that neither I, nor, I suspect, many men have read. But I'm sure it's wonderful. I have no problems whatsoever with women's literature focusing on relationships, because relationships are very important. This stock has been climbing quite steadily. It's at H$62 today, but a bit, but not far from the high of H$66. Strike price is again H$25, which is just right. The call is just above H$2, while the put is closing in on H$3.50. Going out on 3,000 or so screens. Critics aren't very excited with it, just 42% giving their approval on RT. This movie is an interesting contrast with XPNDB: one features an ensemble cast, and is about as macho and testosterone driven as possible; one is about as woman-centric as possible, and stars just one woman. Not a coincidence that they are opening opposite each other. The one thing that confuses me is why a guy (Ryan Murphy) was chosen to direct this. I'm sure he's good, but this feels like it probably could have benefited from a woman's touch. Either way, I'm not betting against Julia Roberts, a huge bestseller, lots of gorgeous scenery, and some nice men being nice to a movie star. Critics are complaining that it's self-indulgent. I think that's the point.

Stock: Long

Call: Long

Put: Short

Aiming, of course, at a completely different crowd, is Scott Pilgrim vs. The World, based on a comic I've never heard of. Michael Cera, who is defying all kinds of conventional wisdom by maintaining his status as a movie star, is Scott Pilgrim. He falls in love with a girl, but then has to battle her seven evil ex-boyfriends. Great premise, that's for damn sure. It's ridiculously stylized, with great graphics and CGI. Stock (SPILG) is not doing that well, crashing the last couple of weeks, down to H$54, from a high of H$81. Sounds like the hype got the better of a few people. Strike price is H$25, which doesn't seem very realistic any more. It's going out on 2,800 screens, a marginally more conservative release than the other two, but actually somewhat optimistic, given that it has sort of an indie feel. Critics are very impressed, with a 76% rating on RT. I am betting against the market, because at the end of the day, one thing matters above all else when making these predictions: is it a good movie?

Stock: Long

Call: Long

Put: Short

Update Sunday night: I took a risk on Scott Pilgrim, partially because it was getting great reviews, partially because I like the idea, and partially just for the hell of it. Now that this game is back to being irrelevant, what with that whole overreaction by the MPAA and their friends in Congress, I wanted to take a position and stick with it just for the hell of it. So that's now out of my system. At least I hope. The Expendables did as the market predicted, coming in well above the strike price, at $35 million, adjusting up to H$94. Nicely done, Mr. Stallone. Julia Roberts came in just under the strike price, but almost exactly at the stock price, earning $23 million, and adjusting up a grand total of 32 cents. Nicely done, HSX traders. Scott Pilgrim did better than most arthouse flicks, but not as well as the other movies this weekend, bringing in a grand total of $10.5 million, and adjusting down by H$21, from H$49 to H$28. Still, I'll hold that long to delist. Also going long to delist on Julia, but shorting Sly and Co., because that looks like a flash in the pan.

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.

July 30, 2010: Dinner for Cats & Dogs and Charlie St. Cloud

Three moderately interesting movies are opening this weekend, two comedies and one drama.

First up, let's go the family route. "Family" meaning, "for kids," because I can't see a lot people going on dates to Cats & Dogs: The Revenge of Kitty Galore (CTND2). Just not seeing it. I imagine the CGI is good, and I'm sure it has a few laughs. But this smells formula. Stock is at H$45, down from a high of H$64. Looks like it's sinking. Strike price is H$20, which is not quite ridiculous (although I'm sure it made sense when it was set), but doesn't make a lot of sense. Call (CND2CA) is still above IPO, which is somewhat surprising. What is not surprising is that the put (CND2PU) is above H$3 and rising. What is also unsurprising is that critics are savaging it, with a 17% rating on RT. It's going out on 3,700 screens, the widest release of the weekend. That's better than I was expecting, but not terribly meaningful. Not hard to guess where this one is going. No Blockbuster Warrant, which is both unsurprising and kind of a relief.

Stock: Short

Call: Short

Put: Short

Next up is a tearjerker that I have even less interest in, although it looks reasonably well-done. Charlie St. Cloud (DLCSC) is based on the book The Death and Life of Charlie St. Cloud. Not terribly surprising that they took out the first part of that title for the movie. Zac Efron stars as a guy who feels guilty for the death of his little brother. Zac Efron has a strong appeal for a certain demographic, and he seems to be choosing good roles, but I'm not in that demographic. The stock is at H$34, down from a high of H$47. So, modest expectations that might be met, but I'm not optimistic. Strike price is H$20, which is ridiculous, because the price of the stock never came near justifying that kind of price. It was headed there, tho, so maybe that's understandable. We're seeing more rationality in the option prices here: Call (CSTCCA) is way below IPO, currently at 70 cents, while the put (CSTCPU) is at H$4 and rising. It's going out on 2,700 screens, a good release, but not quite blockbuster territory. Critics are heartfelt in their near-universal disparagement, with only 9% approving. Any reasons for optimism? Any at all? None as far as I can see.

Stock: Short

Call: Short

Put: Long

Finally we have a movie for the above-15 set. Dinner for Schmucks (SHMUC) stars Paul Rudd as a corporate climber, and Steve Carell as a total dweeb who becomes his friend. And dinner companion. And potential victim. Certainly an interesting idea for a movie. Stock price is H$66, which sounds reasonable, but is down from H$94. Clearly a victim of its own hype. It bottomed out at H$55, so it's rebounding nicely. We have another H$20 strike price, but this one is realistic, and may even be low. Call (SHMUCA), of course, is doing well, above H$4. Put (SHMUPU), of course, is sinking, below IPO. Looks like a great role for Steve Carell. Almost 3,000 screens, nice and wide. Critics are somewhat lukewarm, with only a 54% rating on RT, and not a lot of love in the positive ones. That prompts a second look. The stock price suggests an opening weekend of $24 million, which I think is possible even if it's not a great movie. At the very least it's unlike any other movie currently out there. There's a good reason for optimism.

Stock: Long

Call: Long

Put: Short

Update Friday morning: All three are moving in the direction I expected: Cats and Dogs continues to drop, down H$2.66 this morning, Zac Efron and his soulful eyes are down a little less than a buck, and the Schmuckfest is up H$3.50. Maintaining all positions.

Update Sunday night: Just about everything came in as predicted. Dinner for Schmucks came in at $23 million, which was a shade under the prediction of the stock price. It adjusted down H$5, from H$67 to H$62, which is trivial. Cats & Dogs and Charlie both came in at about $12 million, way, way below their strike prices. Both adjusted down. So, out of 9 predictions, I got 8 right. That's a good weekend at TEQP-HSX.

July 23, 2010: Salt and Ramona

We have two movies with female protagonists this weekend, but very different demographics.

First up, a kid's movie. Ramona and Beezus is based on the popular books, which I remember when I was knee-high to a blockbuster. I don't think I ever read them, but I remember the name. This is presumably an attempt to start a franchise. Not looking good, tho: the stock (RMONA) is tanking, down to H$27 or so, down from a high of H$44. Quite a precipitous drop, too, in just the last few days. Strike price was set at H$15, which is just a bit too optimistic, so the call (RMONCA) is dropping through the floor, below 50 cents. The put, of course, is well above the IPO, at H$4. Won't be hard to call those. Full disclosure: the director, Liz Allen, graduated from USC, and I've met her a couple of times. So I'm a smidgen biased. Critics are mostly enthusiastic, with a 59% rating on RT. One more positive review, and it's certified fresh! It's going out on a good number of screens, about 2,700. It needs $10 million to make the strike price. That's a PSA of $3,600. It's a very narrowly targeted demographic, but it's also a somewhat underserved demographic. There are always a certain number of family movies, but not a lot just for little girls. The challenge will be getting little boys to see it as well. My guess is that the stock has bottomed out, and that there is more potential on the upside than the downside. There isn't a Blockbuster Warrant.
Stock: Long
Call: Short
Put: Long

Angelina Jolie is back, in the kind of role that she does very well: action adventure. Yeah, baby! Salt (ESALT) looks good to me, although I am a big Angelina fan. Stock has been drifting lower, to H$92 today, down $3 today, and down from a high of H$110. Strike price was set at H$4o, which is now slightly out of whack with the stock price, which predicts an opening of $34. Call (SALTCA) is, predictably, dropping, below IPO. Put is doing really well, up to $4. All the signs so far are pointing in roughly the same direction. Strike price for the Blockbuster Warrant (BWSALT) is at H$100, a very reasonable price. This has not been dropping, and is at H$10. So that sign indicates marginally better prospects than the other securities. Critics are not particularly impressed, but they're not hating it, either, with a 56% rating on RT. Normal people seem to like it, with an A- so far on Yahoo! I'm more optimisitc than the market, I think there is more potential on the upside than the downside. I'm going out on a limb and betting that it will make the strike price, although not by much. I'm aiming for the sweet spot, between the call and put, right around H$40.
Stock: Long
Call: Short
Put: Shot
BW: Long

Update Sunday night: I was slightly off on the stock for Ramona et al., but otherwise I nailed it. Ramona and her sister and friends came in at $8 million, slightly below my expectation, but otherwise a decent showing. The options were a no-brainer. Salt did hit the sweet spot between the call and the put, right at $36.5 million. I would not be surprised if it adjusted up. The stock also adjusted up slightly, to H$98, from H$93. The Blockbuster Warrant for Salt is down by a hair, to H$9, but that's largely meaningless. Mostly a good weekend.

July 16, 2010: Inception, Standing Ovation

There are two movies opening tomorrow. One of them is one of the most highly anticipated movies of the year, featuring an A-list star, and an A-list director. The other is a movie that few people have ever heard of, starring total unknowns.

Let's get the wannabe out of the way first. Standing Ovation (STNOV) is about some tween girls who just want to sing and dance, and live their dream. I can't begin to imagine that the plot is remotely interesting, but I'm also years away from being remotely in touch with the target demographic, so what do I know? The trailer seems well-done, which is a plus. I researched the team on IMDb, and it's not a particularly impressive group, but the director and producer have worked together before, always a plus. Stock is at H$4.47, which might be a tad optimistic. There isn't much to go on here. No options, not a surprise. There are only two reviews on RT, both negative. Again, not much to go on. It is going out on 623 screens, which counts as a wide release (600 is the threshold for a wide release). Strike price indicates an opening weekend of $1.65 million. It would need a per screen average of about $2,600 to hit that. It needs about 330 people per screen. Assuming 15 screenings per theater over the course of this weekend (5 per day for 3 days), that means they need at least 22 people per screening. That doesn't sound impossible. I'm sure there are a few hundred thousand screaming teenage girls who can convince their parents to take them to see this.

Stock: Long

Now we come to the blockbuster, Inception (INCPT). Boy does this look interesting. Starring Leonardo DiCaprio, and directed by Christopher Nolan, who should have a much bigger reputation than that M. Night guy. A movie based on an original idea! How cool is that?!? A movie with CGI that is actually justified by the plot. Wow. Stock has been rising pretty steadily, to a current H$191. That's down from a high of H$215, but that's not much of a drop. It's been incredibly volatile of late, down H$8 yesterday, up H$11 today. The price suggests an opening weekend of at least $70 million. Critics are very enthusiastic, with an 87% rating on RT. Strike price is H$75, with the call (INCPCA) not much above the IPO, at H$2.52 and sinking. The put (INCPPU) is doing quite well, almost at H$5. Strike price for the Blockbuster Warrant is H$200, and the warrant is well above IPO, at H$13. I am very optimistic about this movie, and I don't see much reason not to be. It may be a difficult concept to understand, but I think there are a fair number of people who will be thrilled to see a movie with an original plot. It's long, 2 1/2 hours, which might cut into the number of screenings, but it's also going out on 3,700+ screens.

Stock: Long

Call: Long

Put: Short

BW: Long

Update Friday morning: Inception is down H$5 this morning, but, considering how volatile it has been, that's not surprising. This seems to be one of those very polarizing movies - if you get it, you'll love it, but if you don't, you'll hate it. I'm guessing more people will get it, and they will really love it. Still going long. Standing Ovation is down H$0.39 today, which is about a 10% drop. That's not a great sign. The stock has had an interesting ride - it's spiked on several occasions, obviously on significant news - for example, actually getting a release date. But then it invariably drops. Not sure what that means, but it's interesting to note. But it still has minimal expectations. I'm not real confident, but still going long.

Update Sunday night: I don't know why I stayed long with a movie that obviously was drivel at best, but I did, and therefore got burned by Standing Ovation. I also was a little too optimistic about Inception - it cleared $60 million, below the strike price, and below the stock price. But the response has been so great that I don't mind losing money on it. Sorcerer's Apprentice basically bombed, coming in at only $17 million for the weekend, plus $7 million previous, so it adjusted down, from H$85 to H$54. A good weekend to be pessimistic, not a great weekend for me. But a good weekend for movies in general, apparently - a great movie made money, a bad movie bombed, and a piece of garbage was toasted. That works for me.