May 14, 2010: Just Wright the Letters to Juliet, Robin Hood

Now that summer is here, we have a good mix of movies, the occasional drama and romantic comedy competing for attention with the blockbusters. Plucky little things, those dramas and romcoms. And, of course, we have the inevitable blockbuster that isn't, where the second part of "blockbuster" is the more apropos word. We may have one of those this weekend.

First up is a romcom with Queen Latifah and a rapper named Common, Just Wright (JUSTW). I'm not clear on why you would call yourself something that literally describes you are lacking in any kind of unique quality, unless it's a play on words - it's very uncommon, I suppose, to call yourself Common. Regardless, I am, as you might have guessed, not all that familiar with Mr. Common's work. I am more familiar with Queen Latifah's work onscreen, and just loved her in Stranger Than Fiction. It doesn't hurt that that is one of my all-time favorite movies. The stock had a very nice rise for a few weeks, going pretty much straight up, but it has been dropping precipitously for the last week or so. It's at H$27, down from a high of H$37. Strike price is H$10, a good price. The call (JUSTCA) is down to H$1 or so, roughly in line with the stock. The put (JUSTPU) is at H$3, which seems on the pessimistic side. It's only going out on 1,800 screens, not a great release. Critics are not impressed, with only a 33% rating on rottetomatoes.com. It sounds utterly predictable and safe, which is both a good and a bad thing. But it doesn't sound terrible, which counts for something. I'm looking for the sweet spot, around $10 million, right between the call and put. There are fairly moderate expectations, which, hopefully, will not be hard to beat. But this bears careful watching. Note: For some reason, there is not a CX derivative. Not sure why.

Stock: Long

Call: Short

Put: Short

Next up, with better prospects, is Letters to Juliet (LJULT), looking like something between a romantic comedy and a romantic drama. Doesn't look funny, but doesn't look like a tearjerker, either. Looks quite inspiring, just maybe. It's an intriguing idea: a woman vacationing in Verona, Italy, where Romeo met Juliet, finds a letter from 1957. She eventually reunites two long-lost lovers. Very sweet. The stock has been rising steadily, even this week. It's currently at H$48, a high. Hmmm. Looks like we might have us a sleeper hit on our hands. It's going out on 2,800 screens, and it doesn't have a lot of competition right now. Strike price is H$20, which is way optimistic. Call (LJULCA) is, whaddya know, barely treading water. If this makes the strike price, we will know we have a sleeper hit. Put (LJULPU) is also predicting sub-$20 numbers, currently around H$3 and a half. The CX derivative is actually behind the stock, at about H$45, which is an interesting sign. Really suggesting a sleeper hit with this one. Critics are not enthusiastic about this one, either, possibly given that it looks completely predictable and safe. But it also looks great, and the idea of a romantic movie with an older woman at the center of it (Vanessa Redgrave) is kind of nice. And I just love the shot of her long-lost love showing up riding a horse. Completely cliched, but utterly charming for the right people.

Stock: Long

Call: Short

Put: Long

CX: Long

Finally we have the blockbuster wannabe that looks like it might very well be a bust, Robin Hood (RBNHD). Russell Crowe and Ridley Scott team up in a movie that just about screams "Gladiator in Sherwood Forest." Although there are also shots in the trailer of a bunch of ships landing on a beach, and being met with fierce resistance. Which also suggests "Saving Private Ryan in Sherwood Forest." Regardless, this looks like an action-adventure movie that happens to take place in medieval England and happens to feature one of the iconic guerrilla warriors of history. It looks quite serious, with many sobering scenes of old men passing down wisdom to young men, and the young men avenging the old men, with most of it shot in shades of grey, green, khaki and drab. With the occasional orange when there is firelight present. I am not optimistic, and neither, apparently, is anyone else - the stock is down to H$91, from a high of H$156. That's a catastrophic drop. Strike price is H$40, a once-reasonable target that is looking increasingly untenable. The call (RBNHCA) is still above the IPO, at H$3, but it's dropping, and I expect it to continue on that trajectory. The put (RBNHPU) is rising, as expected, aiming at H$4. The CX derivative is still at H$117, but it had farther to drop, coming from a high of H$168. It's going out on more than enough screens, but critics are not excited, with only a 44% rating on RT. And the positive reviews are middling in their praise, struggling to find some justification for approval. Harry Knowles, in a superb review, just shreds it, calling it a "colossal failure," and justifying that description with a highly detailed outline of the actual history involved, and why this movie should have nothing to do with that actual history - it should just be a movie about Robin Hood, the idea, the legend, the myth. We're looking at a bomb of possibly historic dimensions here.

Stock: Short

Call: Short

Put: Long

CX: Short

Update Friday morning: Robin of the Hood is doing well this morning, up H$4. This is not surprising, given the beating the stock has taken over the last month. Just Wright is looking a little more right, up H$1.50, while Letters to Juliet is down from its high, down a buck and change. All of this feels like noise. The buzz on Robin Hood is just relentlessly negative; even the positive reviews are just barely that. Iron Man presents a strong contrast because its very stylized, and just plain fun. Robin Hood looks way too serious for the mood of the audience right now. Expectations for Just Wright are fairly low, and I expect they will be beat without much trouble. The one I am most nervous about it Letters. It might open a shade below where it is now, but my opinion on that is not strong enough to switch positions. OTOH, I am expecting it to build. This movie looks like a long-term bet. Some people are going to hate it, but some people are going to be thrilled that there is something for them in the theaters. Maintaining all positions.

Well this was sort of an interesting weekend for TEQP-HSX. I got all the stocks wrong, but I got all of the options right, and one of the two CX derivatives right. I wasn't far off on the stocks - RBNHD adjusted up by a little more than H$5, JUSTW was down by a little less than H$3, and LJULT (the big loser) was down by H$6. So RBNHD and LJULT each reversed the trend that they were on, while JUSTW maintained the trend, but also went against the movement on Friday. The lesson for this week is pay close attention to trends, but be clear on how much weight to give to them. The trend with RBNHD was right, and the market was basically right. JUSTW did not have much potential, and it was fairly predictable. LJULT had been surging, but didn't have a lot of momentum. Not a great weekend, but not bad. I'm just glad I shorted RBNHD at H$107.

Holding all short to delist.

March 31, 2010

There is one movie opening today, The Last Song (LSONG). Miley Cyrus stars as a moody teen girl with issues about practicing the piano, relations with her father, and relations with a cute guy. All of this takes place around a house on the beach. It's based on a novel by Nicholas Sparks.

I'm sure it's quite moving for people in the target demographic, which does not include me. I like Miley Cyrus, she seems nice and somewhat wholesome and responsible. She definitely works hard. This looks like a good role for her, moving slightly out of her comfort zone, from constantly upbeat and perky teenager to talented but moody teenager. Stock is up H$3 and change today, a good sign. Strike price is H$15, which makes perfect sense. Call (LSONCA) is also up H$3 and change. Put (LSONPU), meanwhile, is on a downward trajectory, just barely above the IPO. Critics are pretty savage, with only a 6% approval rating on rottentomatoes.com, but that's to be expected. Since it's opening on a Wednesday, the adjust formula is slightly different - Fri-Sun x 2.7, + previous box office. So the price includes Wednesday and Thursday. It's opening on lots and lots of screens. The CX derivative is at H$49, although that's down from the very high price of H$56.

The last Nicholas Sparks movie, Dear John, did quite well. We know exactly what we are going to get with this movie. Hey, teenager girls need their sugarcoated lessons in life as much as anyone.
Stock: Long
Call: Long
Put: Short
CX: Long

March 12, 2010: Green Zone, She's Out of My League, Remember Me, Our Family Wedding

A solid crop of movies this weekend, but it doesn't look like any of them are going to break out.

First up is Green Zone (GREZN), Matt Damon starring in a movie about searching for weapons of mass destruction in Iraq. It's directed by Paul Greengrass, who did the second and third Bourne movies. That's a successful pairing, Damon and this director; those movies opened with $52 and $69 million, respectively. Expectations are lower for this one, with the stock in the low 60's. Strike price is H$25, a reasonable bet. The call (GREZCA) is above H$3, a good sign. That would put the stock at H$75. The put (GREZPU), however, is also above H$3, and has had a steadier march up. The CX derivative on HSX is at H$60, dropping substantially of late. Reviews are decidedly mixed, at 50% on rottentomatoes.com. My gut tells me that the floor for this movie is $20 million, and that there is more potential on the upside to be surprised than on the downside. Definitely one to watch tomorrow morning.

Stock: Long

Call: Long

Put: Short

CX on HSX: Long

Cantor: Long

Filling in the "disposable raunchy teen comedy" slot is "She's Out of My League," (SHOML), about an average-looking guy who scores with a seriously hot girl. It's a good premise for this kind of movie. Stock is in the high H$30's, just off the high. Strike price is H$15, with the call (SHOMCA) at H$3. That's a stock price of H$48. Put (SHOMPU) is at H$2.52, so mixed signals there. Just watched the redband trailer, which is funny. Signals are looking good. It's at 41% on rottentomatoes.com, which is not surprising, and probably not all that relevant. I have a feeling the target audience will like this. No votes on IMDb, kind of a bummer.

Stock: Long

Call: Long

Put: Short

CX on HSX: Long

Cantor: Long

Robert Pattinson, who broke big with the Twilight series, shows up in another movie, "Remember Me," (REMBR) a movie with an utterly forgettable title. The plot also sounds fairly forgettable, like a coming of age story with some good casting. Besides Pattinson, Chris Cooper and Pierce Brosnan play distant fathers, and Emile de Ravin is the love interest. I have zero interest in this. Sounds like an arthouse movie that got lucky. The stock is at H$34, down from a high of H$39. The call (REMBCA) is below the IPO price, not surprising, and not a good sign. The put (REMBPU), meanwhile, is above H$3. So far, every signal is pointing to a flop. The CX derivative on HSX is also down, to about H$35. That's another one. On Cantor it is, inexplicably, at $43. Reviews are not good, at 38% on RT. My impression is that it might attract a good female crowd, but men are going to stay away in droves. The average rating on IMDb is 5.4. Wow, that's not good.

Stock: Short

Call: Short

Put: Long

CX on HSX: Short

Cantor: Short

Last, and probably least, is "Our Family Wedding," (FAMWD) about a wedding between an interracial couple. The twist is that he's black, but she's not white, she's Hispanic (although Hispanics can be of any race). It's a very standard premise, and sounds highly predictable. The cast is decent, but no superstars. Stock is H$23, and it's nosediving. Movies with black or Hispanic casts are occasionally underestimated on HSX, and that might be the case here, but I don't think it's going to beat the market by much, if anything. Strike price is H$10, which suddenly looks optimistic. Call (FAMWCA) is barely above a buck, which is a terrible sign. The put (FAMWPU) is, as can be expected, doing well, coming close to H$3. CX derivative on HSX is at H$29, also nosediving. It's at 4% on RT, which is about the strongest signal possible for "bomb." Sounds like it could be offensive to people of all races.

Stock: Short

Call: Short

Put: Long

CX on HSX: Short

Cantor: Short

Update Sunday night: Not a bad weekend for me. I missed Green Zone and She's Out of My League, but nailed Remember Me and Our Family Wedding. I noticed that Green Zone was dropping on Friday night, so I sold my the shares on Cantor that I had bought in the low 70's (whew!). I bought 3 shares at $62, as a hedge. So I lost a tad bit there, but not much. Now I regret not shorting it at $91! Turns out that the Iraq war problem affects major stars, as well. My problem with the marketing is that I couldn't tell quite what the movie was about. Is he looking for weapons of mass destruction? We know there weren't any. So I wasn't quite sure what this movie was about. I overestimated the audience for SHOML. A movie like that really has to rock to break out of its niche. I also forgot that the other studios will probably be dumping bad movies the weekend after a major blockbuster like ALCNW. More lessons learned.

November 20, 2009: Blind Side, Planet 51, New Moon

There are three movies opening this weekend, one rather large one, and two others, whose studio executives are brave enough to release movies against one of the most anticipated movies of the year.

Let's get the small fry out of the way. First up is Planet 51 (PLT51), an animated movie about an astronaut who ends up on another planet, where the aliens look and act a lot like earthlings. I like the trailer, I think it's a funny concept, particularly for a kid's movie. Not many people seem to agree with me - the stock has been tanking, dropping from H$57 just a month ago to H$38 today. Much of that, I am sure, is because traders are assuming that Twilight 2 will overwhelm everything in its path. I'm not so sure - that's going to be a big hit, but primarily with young women. The strike price is H$20, which seems very high today, although it made sense a month ago. Call is (P51CA) not doing too badly, considering, just below H$2. The put (P51PU), as expected, is doing well, aiming at H$4. The CX derivative on HSX, interestingly, has followed the same trajectory, but hit a higher high (H$64), and is still in the mid H$50's. On cantorexchange.com, the same security is down to $45. It's opening on 2,600+ screens, which is a good wide release. There aren't enough reviews to get a good feel at rottentomatoes.com. So it doesn't look good - most of the signs are negative, except for the fact that the trailer is entertaining. Still, at this price, it also looks like a good deal. The second weekend for this movie will be Thanksgiving weekend, so assuming the word of mouth is even remotely decent, it should delist well above the adjust.

Stock: Long

Call: Short

Put: Long

CX on HSX: Short

Cantor: Long

'Planet 51' Theatrical Trailer @ Yahoo! Video

Bringing us rather powerfully down to earth is The Blind Side (BLDSD), Sandra Bullock starring in a true story about a Southern woman who takes in a young African American man. It's supposed to be for one night, but ends up being forever. That young man is now an NFL left tackle (hence the title - the left tackle defends a quarterback's blind side). The trailer is inspirational as all get-out. It's a great role for Sandra Bullock, a solid contrast to her other two roles this year. It's a powerful combination: a Southern woman, football, and a big, potentially threatening, African American young man. There's going to be a whole lot of redemption up there on the screen. This is going to play very, very well in the South. Which means that it may very well be underestimated on the coasts. The stock has been mostly moving up, and is around H$41. Strike price is appropriately set at H$15. Call (BSDCA) is below IPO, at H$1.61 as of this writing. Hmmm. But a $15 million opening weekend would translate to an adjust of H$40.5. So the call is predicting that the stock will not adjust much, if at all. The put (BSDPU) is moving up smartly, heading towards H$3. The CX option on HSX (BLDSD.CX) has been floating in the mid-H$40's, but trending down. On cantorexchange, however, it's up $3 today to $43. It's doing exceptionally well on RT so far, with 73% positive. It's also on 3,100+ screens. There is one strong positive: Tim McGraw is in it. You don't get more Southern star power than Tim McGraw, with the possible exception of his wife. His presence will give it all kinds of credibility where it counts.

Stock: Long

Call: Long

Put: Short

CX on HSX: Long

Cantor: Long

Then there's this little movie called The Twilight Saga: New Moon (TWLI2) about some cute undead guys. I can almost hear the shrieking teenage girls from here. I haven't read the books and have no intention of doing so. I didn't see the first movie and have no intention of doing so. So I'm not the best judge of where this is going, but I do sense a little bit of a backlash. Maybe that's because I am so uninterested in it myself. The stock has been climbing, of course, and is at H$260, or about a $96 million opening weekend. The strike price is H$90, and the call (TW2CA) is soaring, almost at H$9. Lots of people are very optimistic about this one. The put (TW2PU) reflects the same sentiment, dropping below IPO. There's a Holiday Warrant (HWTW2), with a strike price of H$220. That's in the clouds, too, at H$20. The CX option is, of course, higher than the stock, at H$273. It's only at 53% on RT at this point, but who cares? It's going out on a bazillion - sorry, only 4,000+ - screens. The price on cantorexchange.com, however, is below the price on HSX; it's at $245. That's unusual. I'm going to watch this carefully, but I am thinking that $90 million is optimistic for this opening weekend. The fans of the series are fanatical, but this is limited to one segment of the population. I just don't see a lot of guys going to this movie. An $80 million opening weekend would still make it a smashing success.

Stock: Short

Call: Short

Put: Long

Holiday Warrant: Long

CX on HSX: Short

Cantor: Short

'New Moon' Theatrical Trailer @ Yahoo! Video

Wow, I don't think I have ever been so wrong on an HSX prediction. New Moon didn't just open above $90 million - it grossed almost that much on its opening day. It cleared $140 million. Never underestimate the power of teenage girls! I got everything except the holiday warrant wrong. Fortunately, I caught my mistake early, and reversed position on Cantor. I wasn't soon enough to reverse my position on HSX, but at least I made money somewhere. I did get everything right about The Blind Side, so the weekend wasn't a total wash. That did extremely well, clearing $34 million, and adjusting up by H$53. Nicely done, Ms. Bullock. Planet 51 didn't do all that well, only pulling in $12 million, and adjusting down by H$4. I was wrong on the stock, but right about the call and put. It's too early to tell if I got the CX derivative or the Cantor stock right. It is possible to make a judgment about the other two movies and their CX/Cantor securities - I was right about Blind Side, wrong about TWLI2. So I got 8 right and 6 wrong, but I got the big one wrong. I will never live this one down. But I learned from it!

August 14, 2009: Bandslam, Ponyo, Time Traveler's Wife, The Goods, District 9

August in Hollywood used to be like France: nothing happened, people went on vacation. August was a dumping ground for bad movies. All of the summer blockbusters had been released, multiplexes were crowded, kids starting going back to school. Studios felt that there wasn't much in the way of opportunities to make money, so they released movies with little or no potential that they just wanted to clear out of their inventory.

But then the smart studios started counterprogramming against the bad movies. If every other movie being released in a certain month is probably bad, you can attract attention by releasing a good one. Now things are a little more balanced. Studios also have many more options for releasing bad movies - they can send them to cable, straight to video, or do a very limited release. Digital projection helps in this regard. One of the major costs for releasing a movie is making the actual prints that are shown in theaters. But digital projection does not require making a print, so the studio can just push a button, release a movie on 1,000 screens, make at least some money, and hope that enough people like it to make more money on the DVD sales.

We've got five very different movies this weekend; a romantic drama, an animated movie from Japan, a cheesy tween movie, a sci-fi action/thriller, and a low-budget comedy. Some of them are even promising.

Starting with the movie I am least likely to see, we have some cute underage performers in "Bandslam" (BSLAM), about some high school students in a band. I suspect there is malicious gossip involved. About the only thing that caught my eye is that David Bowie is in the cast. Why? I have no idea, and I seriously doubt that I will find out. The trailer seems mostly harmless, with a couple of good lines. There must be an audience out there for this. The stock is all the way up to H$19, so some studio executive is praying that they can break even on a what, $10 million budget? Strike price is H$10, which is just not right. H$19 predicts a $7 million opening weekend. The call (BSLCA) is, somewhat surprisingly, above H$1, although not by much. The put (BSLPU) is somewhat more realistically above H$3. It's opening on 2,121 screens, not a real wide release, but decent. It is - and this is a pleasant surprise - at 80% on rottentomatoes.com. So maybe it's actually a good movie. I think the stock will probably open to somewhere between $7 and $9 million, just because it looks it is competently directed, even if the plot, etc., feels rather stale.

Stock: Long

Call: Short

Put: Long

'Bandslam' Theatrical Trailer @ Yahoo! Video

In the very small "foreign animated" niche, Walt Disney is releasing "Ponyo" (PONYO) from Hayao Miyazaki. I don't think I've ever seen one of his films (a major gap in my film knowledge, but one of several), but his reputation is that of a genius, so this will have a devoted following. It's at 95% on rottentomatoes.com, which is actually what I expect. There are no options, and the stock is around H$7. Buy and hold - this will probably adjust above the delist. It could easily clear $3 million.

Stock: Long

'Ponyo' Theatrical Trailer 2 @ Yahoo! Video

In the very broad "romantic drama" segment of the market, we have "The Time Traveler's Wife," (TTRWF), about a woman who marries a guy who travels randomly through time, showing up and disappearing at unpredictable moments. Certainly is an interesting concept. It stars Eric Bana and Rachel McAdams, both of whom have been flying just under the radar, waiting for the right role to turn them from somewhat well-known to really famous. This might do it for both of them. The stock is at H$53, down today, but very near its high. It has, however, been incredibly volatile. Strike price is nicely set at H$20, just right. The call (TTWCA) is above the IPO price, almost H$3. The put (TTWPU) is around the same price, although neither is a strong indicator. It's opening on just shy of 3,000 screens, so at least the studio believes in it. Only 37% of the RT critics like it so far, which is not encouraging. Certainly not a guy movie, but women might like it. But last weekend, it took Meryl Streep to pull in $20 million for a chick flick. I don't think there will be many surprises on the upside for this one. $17-19 million is my prediction.

Stock: Short

Call: Short

Put: Long

'Time Travelers Wife' Theatrical Trailer @ Yahoo! Video

In the somewhat narrower raunchy, politically incorrect comedy category, we have "The Goods: Live Hard, Sell Hard" (TGDRS). Jeremy Piven plays a used-car salesman who has to sell 211 cars over the 4th of July weekend to save a dealership. The stock has been rocketing up over about the last 3 months, although it's a shade off the high, to H$20. It's up today, a good sign. The strike price is the low low low H$5, so we can all benefit from some fortuitous pricing. It should beat that easily. The rest of the traders interested in these options understand that, with the call (TGDCA) well above H$3, and the put (TGDPU) sinking fast. It's only being released on 1,800 screens, but the expectations are so low that that's fine. Critics are hating this movie, with only a 12% fresh rating. Too bad for them! This looks like a hilariously cheesy, tasteless movie. I love the trailer, I think it's hysterical. Looks like it is designed to offend anyone with good taste but not a wicked sense of the absurd. I even watched the red-band trailer. It pushes the boundaries of taste, that's for sure, but it's also quite funny. Sounds like a cult classic in the making. Jeremy Piven's line "These people are excited about the savings" just cracks me up. I think $8 million is likely, maybe more.

Stock: Long

Call: Long

Put: Short

'The Goods: Live Hard, Sell Hard' Trailer

A few months ago, I started noticing ads on bus benches around LA that announced that the benches were for "humans only," and not aliens. They barely referenced "District 9" (DIST9). I was impressed by the advertising for a movie I hadn't heard of. Now I have, and boy have I heard of it. The buzz around this movie is world-beating. Harry Knowles, Lord God Emperor of fanboys, calls it "the most accomplished, provocative and intelligent science fiction I've seen in this new century." I find him a tad tedious, but the man does know his movies. The stock has followed almost exactly the same trajectory over the last six months as The Goods, but has reached a much higher level, and is currently just below H$90. It's down today, but that's probably profit-taking from people who have made 100% or better returns in the last three months, which could be quite a few people. The strike price is H$30 - good job, D.Mac - but the call (DS9CA) is above H$6. That means rabid excitement on the trading floor. The put (DS9PU) is below the IPO, but not by much, so someone isn't buying the hype. I, however, am. It's on 3,049 screens, and at 95% among the critics. It's produced by Peter Jackson. Rarely do the stars align like this. I think $35 million this weekend is entirely possible, even with an R rating. I wouldn't be surprised at $40+.

Stock: Way, way long

Call: Long

Put: Short

'Uninvited' Theatrical Trailer @ Yahoo! Video

Update Friday morning: DIST9 is up H$5, a good sign. TTRWF is up H$1.90, which I think is mostly noise, and not all that significant. BSLAM is down H$0.52, which really is noise. TGDRS is down H$3, not a good sign, but that's still about a $7 million opening weekend. I'm still optimistic, and the derivatives are still a good bet. PONYO is up H$1.30, and still has nowhere to go but up. So no changes on my predictions.

Update Sunday night: I was mostly right, or close, except for BSLAM, which turned out to be a total bomb, clearing just over $2 million this weekend. But I did get the options right on that one. DIST9 opened up, although not in the stratosphere, at $37 million, PONYO came in just about on target with $3.5 million, and TTRWF came in right where I expected it, $19 million, although that was slightly below the market's prediction. Finally, TGDRS did in fact drop as predicted by the Friday morning action, with just over $5 million, below my apparently optimistic projection. That was only a H$3 drop, so no big deal, but I did let my reaction carry me away a tad. All in all a good weekend. I am going to keep all of my positions, instead of just shorting everything, except BSLAM, which I am shorting with a vengeance. I think DIST9, TGDRS, and PONYO will delist above the adjusts, while I think TTRWF will drop slightly below. We will see in four weeks!