I haven't finished my new spreadsheet for evaluating opening weekend numbers, but I did come up with what I hope is a good insight. I noticed that there are a number of movies that peak on HSX (and Cantor) a few weeks before release, and then drop. Part of the reason for this, I suspect, is asymmetrical information. Those of us outside the studio know very little about the movie, and what we do know is mostly the result of marketing: who's in it, who are the key creatives, and what it's about. That's what the studio wants us to know. But the studio knows a lot more, specifically the most important piece of information about a particular movie that will determine its success: whether or not it's any good. I haven't developed this theory much beyond this, but I wanted to post about it today.
The first movie we have this weekend is The Backup Plan (PLANB), which actually has not peaked and then dropped. I suspect that because it's not subject to much hype. Jennifer Lopez, the star attraction here, doesn't have the luster that she used to. Stock is H$31, or about an $11 million opening, and has been moving steadily up. Strike price is H$10, a tad low, but not far off. Call (PLANCA) is doing quite well, at H$3 and change. Put (PLANPU), as expected, is dropping, just above a buck. CX derivative has followed just about the same trajectory as the stock, which is a good sign. Critics are not enthusiastic, with a 20% rating on rottentomatoes.com. There are only a few reviews up as of this writing, but I don't expect that to improve by much. It's going out on lots and lots and lots of screens. So what do we know about this movie? It stars Jennifer Lopez, who has some goodwill left over, but has also burned some of her star power. The guy is some handsome dude that I've never heard of. The plot is a variation on the romantic comedy. In these kinds of movies, there has to be a good reason why the couple is being kept apart. She's pregnant, the result of artificial insemination, but doesn't want to tell him. My guess is that this results in her coming up with all kinds of weird excuses for weird behavior. It's not hard to write these kinds of gags, and it's not hard to shoot them. Expectations are fairly minimal, but they should not be hard to overcome. Jennifer Lopez has one thing going for her: she is by far the most mainstream Hispanic actress in the country right now. That gives her a good marketing hook for a good segment of the population. The studio knows a lot more about how to market her than I do. But I suspect they will do that well.
Stock: Long
Call: Long
Put: Short
CX: Long
I'm more interested in the other movie opening this weekend, The Losers (LOSRS). The trailer looks like a lot of fun. This stock has followed the trajectory I outlined above, peaking and then dropping quite precipitously. It's currently at H$34, down from H$57. That's quite the cliff. Part of the hype is, I'm sure, due to the genre. Looks like a fairly generic action adventure movie, with a good B-list cast (although Zoe Saldana is close to being A-list) and lots of excuses for sex and explosions. Good times! Of course, it does star B-listers, most of whom are flying well under the paparazzi radar. Part of the problem for it this weekend will be competing with Kick-Ass, which also looks like a generic genre movie, but is quite the surprisingly good movie. That's going to steal a chunk of the audience. Strike price was set at H$20, which presumably made sense three or four weeks ago, but is close to ludicrous today. So, easy money playing the call and put this time around. Call (LOSRCA) is dropping like a rock, while the put (LOSRPU) is above H$4. CX derivative has also dropped off a cliff, but is still around H$40. Critics are almost kind, with a 50% approval on RT. Once again, low expectations, at least after too-high expectations were purged. I have to admit that I love the trailer, and I am somewhat optimistic about it just based on that. Of course, this is the asymmetrical information in its purest form: we're only seeing the cool shots. But I like how the trailer was put together, because it's not just a fast-paced smashup of lots of explosions. It's got a great mix of action, humor, and even some character development. I like trailers that take some time to show enough of a scene that you have to listen to get the joke. There are some good lines ("Blagyver!") and a few good shots. Love the guy who shoots people with his hands, and then they drop. Very simple, but cool. That suggests that it is well-produced, always a good sign Great production value there - simple, cheap, but cool. I also like the shot of Zoe Saldana opening up coffins. That makes we wonder how they ended up in those coffins. I am not all that much worried about how good the plot is. This is not a movie you watch for the plot, although it helps if it's not completely ludicrous.
Stock: Long
Call: Short
Put: Long
CX: Long
Ironically, I apparently don't have permission to embed the video for the trailer, so watch it at HSX.com if you're interested.
Update Saturday morning: I was traveling yesterday morning, so I missed LOSRS dropping H$4.50. Whoa, not a good sign. Guess that trailer isn't making up for the lack of stars.
Update Sunday night: The Losers unfortunately lived up to their name, not quite clearing $10 million, while J.Lo pretty much met expectations, opening at $12 million and change. I didn't predict the opening for the documentary Oceans, because it opened on Wednesday, and there isn't much data or experience to go on predicting opening weekend box office for documentaries. I probably should have shorted The Losers several weeks ago, then I would have felt comfortable staying short. My big mistake this weekend was staying long on an overpriced CX derivative on LOSRS. But a good weekend overall, as I got everything right about PLANB, and the options right on LOSRS. 6 out of 8, or 75%, ain't bad.
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