It's been a long week, so this will be a short post. Also, none of the movies opening this week have really peaked my interest.
Easily the most interesting movie this weekend is Secretariat (SCTRT). It would be a very cheesy movie if it weren't based on a true story. Even I remember Secretariat, and I know nothing about horses. I also like Diane Lane, and of course John Malkovich is always fun to watch. The stock tanked for a while, but it's back up. Strike price is H$15, with the call doing quite well, and the put barely above IPO. Critics mostly like it, with a 61% rating on RT. What you see is what you get with this one. Disney does these well.
Stock: Long
Call: Long
Put: Short
Look, it's another Katherine Heigl romantic comedy! Sigh. I like Katherine Heigl, I think she's drop-dead gorgeous and funny, and very charming, but Life As We Know It (LAWKI) is dropping like a rock. This is about the worst possible time for me to be even thinking about a movie with this premise.
Stock: Short
Call: Long
Put: Short
Look, it's another Wes Craven movie about teenagers being terrorized! I managed to watch the trailer, and even I wasn't that scared. Sorry, Wes, not going on this ride.
Stock: Short
Call: Short
Put: Short
Update Friday morning: all 3 are down, but Secretariat is only down slightly, while the other 2 are down at least H$2. Maintaining all positions.
Update Sunday night: It wasn't a good weekend for me, but that's not surprising, since I didn't spend a lot of time on these predictions. Secretariat adjusted down, Life as We Know It adjusted up slightly, and - at least I got one right - My Soul To Take dropped, pulling in all of $7 million. Note: It's Kind Of A Funny Story also opened wide, I guess, but I didn't predict it, because I didn't think it was opening wide. It dropped like a rock, but it's getting some good reviews.
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.
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.
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.
One movie opening today, midweek, The Sorcerer's Apprentice (SORAP), hoping to beat "Inception" by at least a couple of days. Stock is at H$79, down from a high of H$127 - we've got another classic bell curve. Not looking good. Strike price for the options is H$35, with the call (SORACA) dropping, although still above IPO, and the put (SORAPU) at H$3 and a half and change. Not much optimism about that $35 million opening. Critics are not enthused, it's at 33% on RT. Ain't It Cool News gives what is probably a consensus view, that it's not bad, but not great. I think the stock has bottomed out, but it's only predicting a $29 million opening weekend. That feels about right. Blockbuster Warrant strike price is H$120, which is feeling unlikely.
We only have two movies going wide this weekend, Despicable Me (DESME) and a reboot of Predators (PRED3), the action movie from the 80's.
Despicable Me looks like fun. Great title. Great trailer. Stock is at H$100, near the high of H$109. Strike price for the options is H$35, right on target. Call (DESMCA) is at H$4 and a half and rising, a good sign. Put (DESMPU) is below IPO and sinking, another good sign. It's going out on 3,400 screens, a good wide release. Critics are nicely positive, with an 87% rating on rottentomatoes.com. There isn't a CX derivative, since those are being cashed out. The strike price for the Blockbuster Warrant is H$120, with the price currently at H$11 and rising. All the signs are looking good, except for the fact that it's down today. But that could be just noise. I'm intrigued enough by the story to want to see it myself. Stock: Long Call: Long Put: Short BW: Long
Predator, OTOH, is not looking so good. Stock is at H$70. It's up H$2.50 as of this writing, but down from a high of H$114. That's not good. This also has a strike price of H$35, which is not terribly realistic. The call (PREDCA) is tanking, below H$1.50. The put (PREDPU), meanwhile, is soaring, aiming at H$5. Exactly the opposite of DESME. It's going out on 2,600 screens, not quite as many, but a decent release. Critics, somewhat surprisingly, are positive, with a 73% rating on RT. I know next to nothing about this, since I didn't see the original, and have no intention of ever doing so. But it sounds like the hype has been washed out of the stock price, and we are back in somewhat reasonable territory. Blockbuster Warrant strike price is H$100, and it's about H$2 and change. Which makes a fair amount of sense. So we're looking at about a $30 million opening weekend with this stock price. That would put it just ahead of The A-Team, and it sounds like this is a better movie. Stock: Long Call: Short Put: Long BW: Short
Update Friday morning: Despicable Me is doing well, up H$3 today, so I am maintaining those positions. However, Predators is down H$8.50, which prompts a rethink of holding the stock long. In a situation like this, I ask myself if there is any reason to bet against the market, and I can't think of one. Sequels and remakes and reboots are not doing well this summer. The biggest name in the cast is Adrien Brody. He's a fine actor, and he's probably fine in this movie, but he's not Arnold and I don't see him as a great lead in an action movie. Reversing position on the stock, shorting it.
Update Sunday afternoon: Despicable Me proved to be a solid performer, with $60 million this weekend, while Predators came in at $25 million. This is very similar to what happened with A-Team and Karate Kid: the family film outperformed expectations by a huge margin, while the action adventure movie came in either below expectations, or just barely above seriously diminished expectations.
I was wrong on the stock for PRED3, which technically adjusted up, but only by H$5. Otherwise I got all of the predictions right this weekend. Anyways, PRED3 is certainly a short to delist.
We're settling in to summer, with a genuine blockbuster, a wannabe blockbuster that looks like it will be anything but, and a sort-of arthouse funky comedy.
First up, the blockbuster, Toy Story 3 (TOYS3). This is the franchise that started other trends - great movies from Pixar, computer animation, animated movies that look like they're for kids, but are really for adults. The anticipation is reflected in the stock price; it's $288, or about a $106 million opening. It's gone mostly up, quite steadily, although not quickly. There was buzz on this one for a long time. This isn't a holiday weekend, so there's no funky adjusting. It's not opening on a Thursday, although I am sure there will be midnight screenings tonight. The strike price is H$110, which is just about right, although just slightly higher than the stock price would indicate. The call (TOY3CA) is doing quite well, thank you very much, at H$5 and a half. The put, however, is also doing rather well, aiming at H$4. The CX derivative is at H$324, although it went through a very different trajectory, hitting H$358 before coming back down. Strike price for the blockbuster warrant (BWTOY3) is H$350. That's at $8 and change, so it's not busting out. The feeling I get is there is a lot of enthusiasm, and potential excitement, but also some caution. We've seen some bubbles burst of late. But we've also seen some surprises, notably last weekend, with The Karate Kid blowing away expectations. One of the cautionary tales was Shrek 4, although that should not have been that surprising, since the franchise was clearly wearing out its welcome, and the third movie was not that well received. Pixar hasn't really had a bad movie, or even a movie that was less than very well-received. This already has a 9.4 rating on IMDb, which is great. It has a virtually unheard-of 100% ratings on rottentomatoes.com. Unheard of, of course, except for the first two, which also have 100% ratings. So the two big questions of late: am I in a bubble? and Is there more potential on the upside or downside? would seem to be answered thusly: I seriously doubt I am in a bubble. The reputation of Pixar and these particular movies is very well-known. Extremely well-known. There isn't much downside. Shrek made $70 million, with mediocre reviews. About the only potential downside is that many members of the audience have severe sequelitis, but this is still a franchise with a reputation for originality. It's opening on 4,000+ screens. The studio is going wide, I'm going long.
Stock: Long
Call: Long
Put: Short
CX: Long
Blockbuster Warrant: Long
Next up is Jonah Hex (JOHEX). There are lots of reasons for uncertainty with this movie. It's based on a comic book that I have never heard of. I'm not clear on what, if any, superpowers the title character has. He is intentionally unattractive. The actor playing him is well-known and respected (Josh Brolin), but not in the opening-a-blockbuster-by-himself league. The hot actress (Megan Fox) may have already outlived her 15 minutes. The director, Jimmy Hayward, doesn't have much relevant experience, but he does have some good movies on his resume, ironically at Pixar. I find it strange that he was chosen to direct this, but I could be missing something. The stock is tanking, down to H$36 from H$103. That's really not good. The strike price is H$20, which, tragically, absurd by now. Call (JOHECA) is below H$1, while the put (JOHEPU) is above H$5. There are only 9 reviews on RT, but with that, it's at only 11%. CX derivative is at H$51, and I think it's that high only because it hasn't had enough time to drop. The strike price for the BW is H$80, which is just sad. It's at 19 cents, down 13 cents today. Almost makes you feel sorry for whoever still has it long. I can't find a single reason to be optimistic about this movie.
Stock: Short
Call: Short
Put: Long
CX: Short
BW: Short
Finally, we have the most intriguing movie of the weekend, at least from a box-office-potential perspective. Cyrus (CYRUS) is sort of a romantic comedy about a single woman, whose son interferes with her dating life. Sounds interesting. The trailer isn't the greatest - John C. Reilly plays a guy who seems a little socially awkward, but who ends up with Marisa Tomei. Jonah Hill plays her son, who proceeds to make life even more awkward. Could be brilliant, could be one of those movies that polarizes audiences. Stock is H$12, down from a high of H$22. Looks like the buzz has worn off a bit. There are no derivatives. It's doing quite well on RT, with an 82% rating. It's only opening on 4 screens this weekend, so it's obviously not adjusting. I'm going to call it anyways.
Stock: Short
Update Friday morning: Both stocks opening wide are moving in the direction I predicted: TOYS3 is up, while JOHEX is down, to H$30. If it wasn't so completely devoid of interesting qualities, I would suspect that would be a buy. But it's still an $11 million opening weekend, and there is some room between that number and zero. Maintaining all positions.
Update Sunday night: Mostly a positive weekend. Toy Story 3 came in at $109 million, almost exactly at the strike price. The stock technically adjusted down, but only H$5. Considering that it was at almost H$300, that's not a great variation. It's an obvious hold long to delist, Also technically, I was wrong on the options, although since it is so close to the strike price, I am going to wait for the final numbers tomorrow. I was right about the CX derivative, which adjusted down quite a bit. The BW is maintaining about the same price, so that's tough to call at this point.
I did nail JOHEX, which is apparently a God-awful piece of garbage. Hard to believe a movie with a strike price of H$20 came in at $5 million. I shorted it at H$79. It's currently at H$13, and I would bet it will delist around H$10. Made a fortune on that one.
Cyrus had a great weekend at its four theaters, so I am reversing position and going long on that one.
Update Monday night: Wow, that was close. Looks like it was a good call for me to wait until today to determine whether or not I was right about the TOYS3 calls. I was, in fact, right about both: it officially cleared $110.3 million, just barely above the strike price, right on the sweet spot. Ideally, it would have been perfect if I had shorted the call, but it cashed out on the plus side, so I'm all good.
We're going back to the 80's this weekend, with a movie based on a TV show from the Me Decade, and a remake of a classic from that era.
First up is The A-Team (ATEAM). Four Special Forces guys from the military (I'm not sure if we're supposed to know what branch of the military they are actually from) are convicted of a crime they didn't commit, so they go on the run and proceed to blow things up in the process of being cool. I have to admit that I am looking forward to this movie, regardless of how utterly nonsensical the plot turns out to be. If you look in the dictionary under "middle-aged white guy guilty pleasure," this would be right there. The stock has followed the classic wannabe-blockbuster bell curve, hitting H$149 before coming back down to earth - it's currently at H$100, or about a $37 million opening weekend. Strike price is $35, right on target, unlike last week's batch of mispriced options. Call (ATEACA) is at H$3, very much in sync with the stock price. Put (ATEAPU) is, however, also above H$3, so we have divided opinions in option-world. Critics aren't excited, with a 51% rating on rottentomatoes.com. The plot, I am sure, is largely irrelevant. But so was the plot in the original, as far as I can remember. The most memorable thing from that entire show's run was Mr. T's line "I pity the fool!" This is purely an exercise in style. It's going out to 3,500 theaters, but, more significantly, it doesn't have a lot of competition. CX derivative is at H$112, down from an absurd high of H$177. The strike price for the blockbuster warrant is H$120, a reasonable guess, but it's trading just above H$3, so not much optimism there. As an exercise in style over substance, it generates a lot of buzz, but not much deep affection. I would like to see it in the theater, but I won't be crushed if I don't. Time to ask the question: is there greater potential on the upside, or the downside? Looks like the answer is the downside - it might open above $35, but it's not looking likely. I'm more comfortable with something between $30 and $35.
Stock: Short
Call: Short
Put: Long
CX: Short
Blockbuster Warrant: Short
Next we have The Karate Kid (KFKID), starring Jackie Chan and Jaden Smith, son of Will and Jada Pinkett-Smith. I have to admit that I have never seen the original (it's on the list), but I am familiar with the idea. I don't have a lot of interest, but apparently a fair number of other people do: the stock is at H$94, right near the high, although it is down H$2 today. That's about about a $34 million opening. Strike price is very close to that, H$35. Call (KKIDCA) is, however, illustrating that fine difference between $35 and $34; it's below the IPO, at H$1 and change. The put (KKIDPU) is heading in the opposite direction, well above H$4. The CX derivative, as most do, is dropping from a high price, in this case, to H$97, down from H$110. Strike price for the blockbuster warrant is H$100, also reasonable, and also looking possible, but barely: it's at H$4 and a half. Critics are surprisingly positive, with a 58% rating on RT. That's not much better than the rating for A-Team, but the reviews feel better. There's a reason to remake The A-Team: explosions are more fun on the big screen. I have heard many complaints about remakes and sequels; it's why I started The Original Ideas Fund. I have a strong gut instinct that this movie, even if it's good, will be a victim of remake fatigue. Much more potential on the downside, methinks, even if it's going out on 3,600 screens.
Stock: Short
Call: Short
Put: Long
CX: Short
BW: Short
Update Friday morning: It's not looking good for either of these releases. KFKID is down H$3.50, and ATEAM is down H$6.50. Fairly obvious what to do. Maintaining all positions.
Update Sunday night: Well, that was quite the surprise. KFKID opened with $56, ridiculously above expectations. The A-Team opened at $26 million, which was expected only insofar as I was predicting an adjustment downwards. So what the heck happened? Someone suggested that if you don't show many movies to a particular segment of the audience for a while, they will respond really well when something finally shows up that they might like. I wasn't aware that the family movie genre was lacking in product, but that sounds about as plausible as anything. Still open for suggestions.
My mistake this week was not paying attention to the trend line for KFKID, and lumping it in with ATEAM as an 80's retread. KFKID did NOT experience the bell curve, it was still on a strong trajectory up. Yet another lesson learned.
We have a bumper crop of mildly interesting movies this weekend, but I don't have a lot of time, so I am going to bang through these fast.
Get Him to the Greek (GHGRK). I have zero interest in this film. It's tanking, currently at H$53, down from H$75. A $20 million opening is possible, although the strike price is H$25, with the call about H$1, and the put above H$4. CX derivative is H$60 and dropping. Reviews, however, are very good, with a 74% rating on RT. OK, I'm a little more interested.
Stock: Long
Call: Short
Put: Long
CX: Short
Killers could be a great bad movie, but I'm not sure it could be a good movie. I love Katherine Heigl, I think she's incredibly gorgeous, but I'm not completely sold on her as an actress. And I am really not sold on Ashton Kutcher as an actor. But this looks like it could be fun. Stock (5KILR) is H$48, down from H$68, but up H$4 today, so it probably bottomed out. Strike price is the same at Greek, H$25, with the same results: call is dropping, below H$1, and the put is, again, above H$4. CX is also tanking. There are no reviews on RT, which means that it didn't screen for critics.
Stock: Short
Call: Short
Put: Long
CX: Short
I am utterly void of interest in Marmaduke (MARMA). From H$74 to H$45 - another slide. Another H$25 strike price, with the call barely above a quarter (H$0.31) and the put, again, above H$4. CX following same trajectory: H$74 to H$50. Only 3 reviews, so, also again, no critics' screening.
Stock: Short
Call: Short
Put: Long
CX: Short
Splice (SPLIC) is the one movie this weekend with some potential to break out. Stock is at H$26, but that's near the high of H$30. Strike price is H$10, with the call aiming at H$3, and the put just barely above IPO. No CX derivative. We could have a winner here.
Stock: Long
Call: Long
Put: Short
Update Friday morning: There are now enough reviews on RT to make a judgment about Marmaduke, and boy, it ain't pretty. 10%. That's right around complete bomb territory. Everything is down this morning, so maintaining the shorts on the dog movie and Killers looks easy. Splice is also down, although just a bit. It's had such a great run up, I'm not surprised that it's taken a hit. $10 million feels high for that movie, but it's going out on 2,400 screens, so I am going to take the risk that we will be pleasantly surprised. I'm also nervous about GHGRK, but the reviews are holding up. Maintaining all positions.
A middling weekend for a bunch of middling movies. My optimism for GHGRK was slightly misplaced; it opened at $17.4 million, adjust down just H$2, to H$47. Still, I was wrong on the stock. Killers opened below that, as expected, with $16.1 million. It actually adjusted up, albeit just barely, from H$42 to H$43. However, that's below where it was when I called shorting the stock, so I am going to give myself credit for that one. Marmaduke opened with $11 million, way, way below that H$25 strike price. Called that one perfectly. My nervousness about Splice turned out to be justified, it opened with $7.45 million. I got 11 out of 15 right, actually quite a nice record for the weekend, although I botched Splice. A large part of the reason for that record was the unfortunate strike prices, which made it easy to predict the options for 3 of the 4. My mistake on Greek and Splice was giving a little too much credit to some very insubstantial buzz. The average of the user reviews on Yahoo! for Splice is C+. OK, that sucks. The others are B to B+. Shorting all to delist.
There are two movies opening this weekend, both comedies. One is pretty much a guaranteed blockbuster, the other is a product of Saturday Night Live.
Shrek 4evah (SHRK4) is finally here, and our beloved green ogre is finally bidding his adieus. It's been fun, green man! I like the way DreamWorks is handling this - they seem to be bowing out gracefully. They've had a great run, now it's time to say goodbye. The stock is trading at H$247, down from a high of H$265, but up H$4 and change today. Strike price is H$90, right on target, with the call (SHR4CA) trading nice and high around H$5. The put (SHR4PU) isn't doing too badly, either, however, aiming at H$3. The stock price indicates an opening of H$91, so the split on the options is understandable. The CX derivative hit a high of H$331, and has been dropping ever since, currently around H$280. It's going out on a bazillion or so screens. It's in 3D, which I almost forgot about, because it's just not that exciting. But that may help the BO. Critics are not that impressed, with only about half reasonably impressed, giving it a 50% rating on RT. I remember not being that impressed with the third one, so that may diminish the appeal of this one. Shrek 2 opened with $108 million, and Shrek 3 opened with $121 million. However, Shrek 3 did not make as much as Shrek 2, $322 million domestically versus $441 million. So we're on a downward trend, but that is taken into account with the stock. The director raises some concerns for me: Mike Mitchell's big movie on his resume is Deuce Bigolo: Male Gigolo. The writers haven't done all that much, either. That suggests that DreamWorks wasn't willing to spend the money for the best people. That's not good. I have no interest in seeing this, but I think there's some lingering goodwill. I think it will beat the lowered expectations. But I will be watching it closely.
Stock: Long
Call: Long
Put: Short
CX: Short
The other opening this week is MacGruber (MGRUB), a spinoff of the Saturday Night Live sketch. Stock is not doing well, currently at H$38, down from a high of H$49. The strike price is H$15. So we have one of those situations where HSX made a good guess about the strike price a couple of weeks ago, but it's now ridiculous. Call (MGRUCA) is below H$2, while the put (MGRUPU) is above H$3. CX derivative is at H$38, down from H$47 -so it has been moving in line with the stock. It's going out on 2,400 screens, not a bad release, but not ultrawide. Critics are excited, with an 89% rating on RT, but that's only 9 critics. I think the trailer is terrible, and I have no interest whatsoever in seeing this movie, which looks like it will bomb.
Stock: Short
Call: Short
Put: Long
CX: Short
Update Friday morning: The Big Green Guy is still doing well, up H$1.50 today. MacGruber is still tanking, down H$2.25 to H$33. One of the questions that I am starting to ask is: If a movie is targeted at a specific audience, what are the chances that it will expand outside of that demographic? For example, last week, Letters to Juliet was targeted at women, with very little chance of attracting men, other than guys on dates. This week, SHRK4 is targeted at kids and families, but the appeal of the franchise is extremely broad. MacGruber, OTOH, is targeted at - well, I'm not sure, exactly, but it's probably teenage boys - and doesn't have much chance of expanding out of that. Maintaining all positions.
Update Sunday night: An almost perfectly split weekend, at least as far as my predictions. A rather terrible weekend, as far as actual results. I nailed MacGruber, which did in fact bomb - it made a grand total of $4 million. I never understood the appeal of this movie, and am very glad I made a good chunk of change shorting it. I needed that shot in the arm, cash-wise, because I was mostly wrong about Shrek 4. It opened with $71 million, not a bad haul, but way below expectations. I made a couple of mistakes: one, I didn't ask myself whether or not I wanted to see it, which is relevant for such a wide, mainstream release. The answer is no, I have no interest, I'm kind of bored with Shrek. Two, I put too much emphasis on the movement in the last two days. Three, I didn't go with the downward trend. Four, I was way too inside the bubble of Hollywood and the industry, and I didn't realize that. That's another question to ask: am I in the bubble? Shrek was getting a huge amount of publicity, but that's all a function of the bubble - lots of media groups want to do interviews etc. with the cast, because that's cheap and interesting for a couple of days. But it's also manufactured by the studio. Way too inside the bubble. That's the lesson for the weak.
The summer season is not quite here, but almost! Next week the blockbusters start, with Iron Man 2 heralding the arrival of the usual bumper crop of explosions, hot bodies, and CGI. Should be fun!
Meanwhile, tho, we've got a couple of movies being dumped into the netherworld of pre-blockbuster movie season. The competition will heat up very quickly, so studios are releasing movies that they don't expect will do very well, anyway.
I finally started up my spreadsheet to judge movies. Neither of these scored very well. Both are going out on lots of screens.
First up, and probably the first to disappear, is Furry Vengeance (FURYV), starring Brendan Fraser, master of the midrange movie. It also stars - if "stars" is the right word - Brooke Shields, who must need a paycheck. Her name is nowhere in the marketing, which is probably a plus for her. Fraser is a real estate developer who wants to clear a forest to make way for a shopping mall or something. The local animals have different ideas. It's almost a clever premise. Well, not really. The stock has been dropping like a rock, and is just below H$25, from a high of H$46. This is what we call a "meltdown." Strike price is H$10, a usually lowball price, but it seems almost quaint with the price of the stock where it is. The call (FURYCA) is just above 50 cents, confirmation of aforementioned meltdown. Put (FURYPU) is at H$3 and change, suggesting an opening weekend barely above $6 million. Which should just about pay for Brendan Fraser's drycleaning. The CX derivative is at H$30, presumably because it just hasn't dropped far enough yet. It has a 3.2 rating on IMDb. Critics are doing their worst, with a 0% (yes, that's a zero) rating on rottentomatoes.com. There are only 13 reviews on Thursday afternoon, which implies that it was not screened for critics. Which absolutely would not be a surprise.
Stock: Short
Call: Short
Put: Long
CX: Short
On the other side of the aesthetic scale from family movies about cute animals is A Nightmare On Elm Street (NELMS), a place where it is dangerous to fall asleep. Not being a connoisseur of the genre, I'm not sure how well this is going to play. It's iconic enough of a franchise that even I know the name Freddy Kreuger, but I'm not sure if this reboot will work as well as others have. The stock is at H$93, down from the high of H$96, but just barely. But the director is fairly new, at least to movies - he's made a lot of music videos. So we can expect it to look good, but we're not sure about the plot. The writers are also a little thin in the movie credits department, so my guess is that the studio didn't put a lot of money into the script, and they hired a journeyman to make it. Neither is all that inspiring, although not all that crucial. CX derivative is H$93, almost exactly the stock price, but down dramatically from the absurd high of H$115. Strike price is H$35, right on target. Call (NELMCA) is riding nice and high at H$4, almost H$5. That gives us a $40 million opening weekend, and an adjust of H$108. However, the put (NELMPU) is not doing badly either, just under H$3. So slightly mixed signals there. No mixed signals from the critics, who basically hate it - all of a 6% rating on RT. Harry Knowles, on the other hand, loves it, so there's hope from geekdom. The key producer is Michael Bay, and his production company made the very successful Texas Chain Saw Massacre and Friday the 13th remakes. We're going to go with that record.
Stock: Long
Call: Long
Put: Short
CX: Long
Update Friday morning: FURYV is down to under H$22 - I don't think it can go much lower, but you never know, so I'm staying with that short. Freddy and friends are up H$4.50 this morning, so that long looks good, too. There must be a lot of people out there desperate for some good horror. Maintaining all positions.
Update Sunday night: Another split weekend. Brendan Fraser's career continues to crater, as FURYV only pulled in $6.5 million, while Freddy was successfully resurrected from the dead, or wherever he was, as NELMS pulled in $32 million. Way to go, Freddy, although that wasn't quite as good as I was hoping. I was optimistic about Nightmare's prospects when it opened with $15 million on Friday, but I forgot how skewed the results are for horror movies - Friday accounted for 49% of the weekend's take. And, of course, it will drop quickly from here on out. Shorting to delist is a sure thing this time around.
My mistake this weekend was not using a checklist as well as the spreadsheet. One item I will have on my checklist when I make it is this question: Is there greater potential on the upside, or the downside? The answer for Freddy et al. would have clearly been that there was more potential on the downside, as it was trading near the high for this kind of movie, and there wasn't a lot going for it, besides the franchise. It's a good franchise, and we have seen other horror franchises rebooted of late, but we've also seen horror franchises sputter. And I forgot about the tendency for horror movies to drop so fast. OTOH, I am happy with my FURYV prediction, because that was trading way down low, and I wasn't sure how much potential there was on the downside. So I'm happy I recognized a complete bomb in the making.
We only have two movies opening wide this weekend, both comedies, and both potential blockbusters. As of Thursday night, however, they are moving strongly in opposite directions.
How To Train Your Dragon (HTRYD) is the latest animated effort from DreamWorks. Other than the original Shrek, I haven't been in love with DreamWorks animated movies. They're generally decent, but not great. This looks funny and charming, but I can sense a cliche or two in the trailer. Stock climbed very steadily for a while, then dropped, but is up dramatically today, to H$127. Strike price is H$50, just about dead-on, with the call (HTYDCA) up to H$4 and change. The put (HTYDPU) is barely above the IPO. Cantor isn't practicing anymore, but the CX derivative is showing healthy signs, at H$137. Good signs there. It's going out on 4,000 screens, and I am sure many of them are 3D. Critics are wildly enthusiastic, with a 95% approval rating on rottentomatoes.com. Not much doubt about how to play this one. Stock: Long Call: Long Put: Short CX: Long
The other movie this weekend is a little more uncertain. Hot Tub Time Machine (HOTUB) has one of the best titles ever, but there are some questions. It stars John Cusack, one of my favorite actors, and Rob Corddry, an excellent comic. But the other two guys are largely unknown, and it's being released by MGM, a dying studio. The stock has been climbing steadily, but dropped H$8 today, not a good sign. Strike price is H$30, which is very optimistic, and the call (HOTUCA) is below IPO, at about a buck and a half. The put (HOTUPU) is above H$4, not surprisingly. It's going out on 2,700 screens, a good wide release. Critics are mostly positive, with a barely-fresh 63% rating on RT. The CX derivative is at roughly the same place as the stock, and has had roughly the same trajectory, although it's not bombing today. I have a feeling there's a lot of profit taking happening in the stock, not terribly surprising. This is a movie that could very easily bomb, because it's such a classic high-concept movie. John Cusack in a movie about traveling back to 1986 is brilliant. There is a large built-in audience for this movie, and it includes me. Stock: Long Call: Short Put: Long CX: Long
Update Friday morning: HTRYD is up H$6 and change this morning, so staying long on that one. HOTUB, on the other hand, is moving in the opposite direction rather dramatically, down almost as much as the dragons are up. Looks like it might bomb. Reversing positions there, although I am also maintaining a long position of 25,000, to hedge it. Completely reversing position on the CX derivative, since it's a shade higher.
Update Monday morning: HOTUB did, in fact, bomb, so reversing position was a good move there. I overestimated the appeal of a boy and his dragon, and should remember that DreamWorks just doesn't have the magical touch of Pixar.
Three moderately interesting movies this week, about a bounty hunter with a special target, a wimpy kid, and some men repossessing unique property.
First up is The Bounty Hunter (BOUNT), Gerard playing the title character, who has to hunt down his ex-wife, played by Jennifer Aniston. That's an interesting premise. The trailer is funny, and it has a certain appeal. Stock is in the mid-50's, down from a high of H$65. Strike price is H$20, with the call (BOUNCA) at H$3 and a half. The put (BOUNPU) is below the IPO price, about a buck and a half, so those signals are in sync. The reviews, however, are utterly savage, with an 8% - and that's a weak 8% - approval on RT. I'm not sure what's up with Cantor this weekend, it looks like the practice site is no longer working. Which is a bummer, because I was having a very good time on it. C'est la vie. I'm not a fan of either Butler or Aniston, and neither of them impresses me in the trailer.
Stock: Short
Call: Short
Put: Long
Diary of a Wimpy Kid is based on the very popular books of the same name. I've never read them, but apparently kids eat them up. The stock (WIMPY) is at H$49, down H$3 this morning (Friday), never a good sign. Strike price is H$20, which seems reasonable, but the call (WIMPCA) is just above a buck, while the put (WIMPPU) is above H$3. Reviews are mixed, at 56% on RT. It's going out on 3,000 screens, a regular wide release. This is highly targeted, but narrowly targeted. Some kids movies are also appealing to adults - this doesn't sound like one of them.
Stock: Short
Call: Short
Put: Long
Repo Men is a futuristic thriller about men who repossess body parts, the way repo men today repossess cars. That's a disturbing idea. I was intrigued at first, but recently I learned that it was shot at least 2 years ago, so it's been sitting on the shelf. Never, ever a good sign. Stock (REPOS) is at H$31, down almost H$3 today, and down from a high of H$46. Strike price is H$15, but the call (REPOCA) is at all of 70 cents, while the put (REPOPU) is at almost H$4. It's at only 22% on RT. It's going out on 2,500 screens. Not a good sign in the bunch.
Stock: Short
Call: Short
Put: Long
Update Sunday night: This was one of those weeks when the market got a couple of things almost exactly right, so there wasn't a lot of excitement. WIMPY and BOUNT both came in at $21 million, WIMPY ahead by a few hundred thousand. Jennifer Aniston, her hair, and Gerard Butler and his chest adjusted down less than 50 cents. That's technically a win for me on the stock, but it's meaningless. It just means I don't have to worry about shorting it tonight in anticipation of the drop tomorrow morning. WIMPY adjusted up about H$8, slightly better, but not by much. It's got an A- rating on Yahoo! Movies, which is not bad. That score always has to be taken with a large grain of salt, but it's not a bad sign. So I'm going to go long to delist. REPOS was, in fact, a total bomb, only clearing $6 million. And to think I was once optimistic about that one. Good thing I caught it in time.
My record this week is 6 for 9, all three calls, the stock for BOUNT and REPOS, and the put for REPOS. Not a bad week for me, but also not a great week for movies. I have no plans to see any of these, and I think they will be forgotten in a year.
Note about The Ghostwriter. Roman Polanski's latest opened wide this weekend, which I didn't realize, and I forgot to include that in my post. Sorry, Mr. Polanski! I'll be sure to pay better attention next time. For the record, it had a good weekend, but only adjusted up 20 cents.
Two movies are opening this weekend, Oscar weekend, one a generic cop movie with a solid cast, and the other another visual-effects spectacular from the usually delightfully twisted mind of Tim Burton.
First up, let's look at the cops, Brooklyn's Finest (BRKLN). I have this funny feeling that the title is sarcastic, but I'm not entirely sure. These Finest include Richard Gere, Don Cheadle, Wesley Snipes, and Ethan Hawke. And Ellen Barkin. Good actors all, but none have really opened a movie on their own in at least a few years. Opening on Oscar weekend, it's not being targeted at the arthouse crowd, that's for sure. Stock is at H$31, and has been dropping from a high of about H$40, although my guess is that it has bottomed out. Strike price is H$15, which is rather on the optimistic side, since the stock price predicts an opening weekend around $12 million. The call (BRKLCA) reflects that unfortunate strike price, as it is around H$1. The put (BRKLPU), absolutely unsurprisingly, is above H$3. The CX derivative on HSX is around H$32, after nosediving steeply. It's also at $32 on Cantor. It's going out on 1,900 screens, a decent release, but not great. Reviews are not terrible, but not good - it's at 31% on rottentomatoes.com. I think these prices are all about right, or maybe on the high side. I'm looking for right around $10 million.
Stock: Short
Call: Short
Put: Long
CX on HSX: Short
Cantor: Short
Then there's the big movie of the weekend and the month, Tim Burton's Alice in Wonderland (ALCNW). Lots of anticipation for this one. Price on HSX is just shy of H$200. Strike price is H$70, with the call (ALCNCA) above H$6. Haven't seen that in a while. The put, of course, is underwater, at H$1 and change. The CX derivative on HSX is at H$226, so much higher than the stock. On Cantor, it's even higher, at $235. So the predictions range from about $75 million to $87 million. It's going out on a very wide number of screens. But the critics' reviews range from merely decent to downright savage. It's at 57% on RT, but it's a very weak 57%. I have a couple of problems with it. First, there are a couple of famous faces (Johnny Depp, Helena Bonham Carter, Anne Hathaway), but they are hidden beneath lots of makeup and CGI. That takes away a certain part of their appeal, notably that they are very good looking. It's in 3D, which of course raises the box office potential, but it wasn't shot in 3D; those effects were added in post. Tim Burton definitely has a very active imagination, the kind that creates worlds suitable for 3D, but I'm not sure he has the technical chops that, say, James Cameron does. The story is apparently quite different from Lewis Carroll's original. In some sense, that doesn't matter, because most people are only vaguely familiar with the story in the first place. But the replacement story sounds very generic-Hollywood. It's supposed to be a kids' movie, but I'm not sure I see this appealing to many kids. I think it will have a huge opening weekend, but then drop quickly.
Stock: Long
Call: Long
Put: Short
CX on HSX: Short
Cantor: Short
Update Monday night: Boy do I feel stupid. Hopefully this will go down as one of the worst mistakes of my movie stock investing career, because I hope I never make another doozie like this one. Shorting a huge blockbuster - what was I thinking? And less than a month after I got burned the same way on Valentine's Day. This is certainly a humbling business. I should have asked the classic question: is there more potential on the upside, or the downside? There was virtually no potential on the downside - this movie was pretty much a lock to make at least $70 million. You had four great brands working here - Disney, Tim Burton, Johnny Depp, and Alice in Wonderland. Certainly was a learning experience. It adjusted from H$205 to H$314. Brooklyn's Finest also adjusted up, although that was not really as surprising.
The big question is - how will ALCNW do over the course of its run? Movies with openings like this tend to drop over time. I'm staying with my short, in the hopes of somehow salvaging some kind of money from this. Also, there are some seriously strong negative reactions on Yahoo!, so I have the feeling the word of mouth will not be that great.
Update from last week: I was wondering how 2COPS and CRAZI would hold out long term. My bet was that CRAZI would benefit from a higher PSA, because fewer movie theaters would pull it. Looks like I completely misread that - 2COPS didn't lose any theaters, and CRAZI only added 3, a miniscule change. Another lesson learned.
Tomorrow is Wednesday of Christmas week, a perfect time to release movies. Two are coming out, Up in the Air and Alvin and the Chipmunks: the Squeakquel.
Up in the Air (UPAIR) isn't actually being released tomorrow; it's been in limited release for about three weeks, and has already grossed $8 million. The stock climbed very steadily for a while, but has been on a roller coaster the last couple of weeks. Still, it's at H$65, not far from the high of H$73. It's expanding to a total of 1,895 screens, which isn't a very wide release. The reviews are incredible, scoring 90% at rottentomatoes, with much Oscar buzz. Of course, it stars George Clooney. And it's directed by Jason Reitman, who directed Thank You For Smoking, one of my all-time favorite comedies. But it's a comedy about people being laid off. So there's some potential downside. As far as I can tell, there are no opening-weekend options, which makes sense. The CX derivative on HSX is at H$72, fairly close to the stock. The strike price for the Holiday Warrant is H$70. Seriously? That's way low, and of course it's well above that. There are Nominoptions for Best Director, Best Picture, Best Actor, Best Supporting Actress, and Best Adapted Screenplay. Go long on all of those. On Cantor Exchange, it's at $71, which is down from the absurd high of $91 (where I shorted it). I think it will do well, but I also suspect that it will build through word of mouth. It's not an easy sell. It will adjust at a formula of [Previous Box Office + (3.0 * BO Fri-Sun)]. It's already done $8 million, and could easily do $7 million on Wednesday and Thursday. That's $15 million. To make the current price, it would have to do about $17 million Fri-Sun. Friday is Christmas, and Saturday and Sunday are the days after Xmas. So it's possible, but very much - forgive the pun - up in the air. But I love a trailer about a guy in corporate America that starts with Iggy Pop's "The Passenger," from his "Lust for Life" album. Stock: Long CX on HSX: Long All nominoptions: Long Cantor: Long
Alvin and the Chipmunks (ALVN2) are back, because the first one made a ton of money. Jason Lee is not back in the starring role as their human overseer. Sounds like a good move on his part. The stock is at H$135, down from a high of $148. Not much of a drop, but I have a gut instinct that it's going to be a precipitous drop from here. It's going out on almost twice as many screens as George & Co., but the reviews are excruciating, at 25% on RT, with several critics calling it the worst film of the year. Reviews aren't all that important for a movie like this, but when they are that savage, you have to listen to them. Strike price for Fri-Sun is H$40, which is a good price for the stock price. Call (AC2CA) is doing well, aiming at H$4. The put (AC2PU), however, is also above water, at H$2 and a half. The CX derivative on HSX is above the stock, currently H$149. Strike price for the Holiday Warrant (HWAL2) is H$150, and it's about H$14. On Cantor, it's at $144, and dropping from above $150. On IMDb, it's scoring a 3.3. Not a lot of votes, but a lot of "1's." Women seem to like it a lot more than men, but men seem to really hate it. Jason Lee probably walked away from $10 million when he passed on this, and he's a guy who could probably use another blockbuster. That says something. There's only one reason to make this movie: milking the franchise. I'm getting a bad feeling about this. I think the charm is disappearing. I'm not even going to look for Nominoptions. I like the idea of the chipmunks, but I think there was enough potential in the franchise for exactly one movie. Stock: Short Call: Short Put: Long CX on HSX: Short Holiday Warrant: Short Cantor: Short
Update Wednesday morning: ALVN2 is up H$3, while UPAIR is down H$5. I'm reversing my position on UPAIR, at least partially - I shorted the max on HSX, and sold half my 50,000 shares. I still think it will do well, but it's going to have to build good word of mouth. I still the expectations for the Chipmunks are a little out of whack. Also, a slight mea culpa: turns out that Jason Lee is in this movie, but just barely - he's in traction somewhere, so his nephew has to take care of the chipmunks. Which means that he was probably contractually obligated to be in the movie, but he didn't really want to, so they sort of put him in it.
Good collection of movies this week, one standard action adventure flick, one war movie, and a family dramedy featuring Robert De Niro.
First up is Armored (ARMRD), about an armored car heist. Always a fun topic! It's got a solid cast, including Matt Dillon and Laurence Fishburn, although the director has the unfortunate name of Nimrod Antal. The stock has been moving up quite steadily, but dropped about a week ago. It hit H$35, and is currently at H$25 on HSX. On Cantor Exchange, it has had roughly the same tragectory. The CX derivative on HSX, on the other hand, has sunk like a stone in the last few days, and hasn't come back Strike price is H$10, and the call (ARMCA) is dropping, down below the IPO price. That makes sense. The put (ARMPU), meanwhile, is marching in the opposite direction, heading towards H$3. It's only going out on 1,900 screens, so it's not a very wide release. There's only one review on rottentomatoes.com. I'm not sure if that's because it's early (I'm writing this on Wednesday night), or because the studio doesn't plan on screening it. If it's the latter, watch out. There aren't a lot of good cheesy action movies out right now, with the possible exception of Zombieland, and that's already gone. Even if it's not that good, it should pull in at least $10 million this weekend. Stock: Long Call: Short Put: Short CX on HSX: Long Cantor: Long
Next up is Brothers (BRTHS). This one is a little more intense. It's about a pair of brothers, one of whom goes to Afghanistan. I'm going to end the description right there. It looks rather intense. Stock has been going up steadily, currently around H$20. The strike price is about as low as possible, H$5, with the call (BRHCA) optimistically trading above H$3, and the put (BRHPU) around H$2. This is interesting: The CX derivative on HSX is at H$18, but the stock on Cantor is at $33! That's a hell of a divergence. It's rolling out on 2,000 screens. It's only scoring 50% on RT. It's got a good cast, but the story seems like a downer, particularly with President Obama's decision to send another 30,000 troops to Afghanistan. The track record of war movies about Iraq or Afghanistan is not good. I would be surprised if it does more than $7 million. Stock: Short Call: Short Put: Short CX on HSX: Long Cantor: Short
Finally, Robert De Niro stars in a quiet family drama as a widower reconnecting with his kids. This looks like quality. It's nice to see De Niro in a sober, simple movie. He deserves something like this. The title, Everybody's Fine (EBFIN) sounds like it both is and is not ironic. It's one of those things that you say sometimes because it's true, and sometimes because you hope it's true. The stock has been marching up, but is still only at about H$16. Mr. De Niro and friends are going under the radar. Except on Cantor, where the price is $27. Strike price is H$5 - not very high expectations for this week's releases! - with the call (EBFCA) doing reasonably well, and the put (EBFPU) tanking, as expected. The CX option on HSX is almost exactly in line with the stock, a good sign. It's the widest release this week, although it's only going out on 2,200 screens. It's at 57% on RT, a solid rating, if not great. It feels like a good holiday movie for people who want something without histrionics. Stock: Long Call: Long Put: Short CX on HSX: Long Cantor: Long
Update Monday morning: Well, I was wrong about all of the stocks, but not by much. Armored and Everybody's Fine turned out to be duds, while Brothers did slightly better than I expected. Apparently the weekend after Thanksgiving is a traditionally slow one, so studios tend to release weak movies this weekend. That's another thing I learned. It makes sense, tho, since the big Thanksgiving weekend movies are still popular, and taking up a lot of screens. Overall, I got 5 out of 15 calls right. But next weekend, things should be heating up quite a bit.
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.
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.
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!
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
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
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
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
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.
We've got a solid diversity of movies this week. An action thriller, a couple of horrors/thrillers, and one kid's movie with monsters. So no comedies.
Law Abiding Citizen (LATCZ) stars Jamie Foxx as an assistant DA and Gerard Butler as a man bent on vengeance after the justice system lets him down. Nice to see the white guy as the bad one. Foxx and Butler have both been in good and bad movies, and both are nominally good box office draws. It's directed by F. Gary Gray, a solid guy. Trailer looks good. Stock has been mostly up, but is retreating. It's at H$36, off from a high of H$47. The strike price is H$15, which looks a smidgen unrealistic, but the call (LACCA) is up H$3, so there's a chunk of optimism there. The put (LACPU) is below H$2, so the signals are in sync there. It's in the high $40's on the Cantor Exchange, which is a good sign. It's going to be interesting to see which is right - HSX or Cantor. It's going out on about 2,700 screens, not the widest release, but not bad. It's too early to get a good critical read. The signs are mostly positive.
The first horror movie of the week is the more "normal" one, at least in terms of production and distribution. Stepfather (STPFT) looks like a decent proposition, a new addition to the family who isn't really Mr. Nice Guy. I find it scary, but I'm not a good judge of these things. The stock has never been very high, and has been drifting lower, topping out at H$22 and currently about H$17. That strikes me as very low. Strike price is H$10, which may have been a shade high, but H$5 would have been ridiculously low. Call (SPFCA) has been plummeting, and is barely above a buck. That makes sense, because this does not look like a $10 million opening weekend movie. Put (SPFPU) is rising, and may hit H$3. It should also be going out on about 2,700 screens. No reviews yet. Traders on Cantor are, again, a little more optimistic; it's above $20 there. I think this is underestimated by the market, and I'm not sure why. I think there's more potential on the upside than the downside.
The next movie is already the most profitable movie of the year, and will easily be one of the most profitable ever made, measured by return on investment. It was made for $11,000. Yes, for the cost of a decent used car. Paranormal Activity (PNACT) is taking the country by storm. Stock is at H$44, and has been going straight up. There are no derivatives, and it is not listed on Cantor. Which is a bummer, because I think it would be a great opportunity to make some serious cash. We're not really quite sure how many theaters it's expanding to, because the studio, Paramount, is asking fans to ask for it. My guess is that it will have an IPO (or ICO) on Cantor when it hits 650 screens, and they don't know if it will hit that many. It's at 85% on rottentomatoes.com. One note: it will adjust at previous box office + 3.0 x this weekend. Previous box office is about $9 million. Subtract that from H$44, you get H$35, which means that it has to do about $10 million. Guess what my call is.
And there's Where The Wild Things Are, one of the most highly anticipated movies of the year, based on the Maurice Sendak book. The stock (WILD) has exhibited the classic signs of hype and backlash; it marched steadily up to almost H$130, but has crashed badly in the last couple of weeks, down to the mid-H$90's. That's a bit of a recovery from H$89. The strike price is H$35, with the call (WILCA) above H$4. H$96 predicts a $35 million opening, so the call is a shade more optimistic than the stock, but not by much. The put (WILPU) is behaving as expected, dropping to below H$2. Traders on Cantor are much more optimistic, and it is at $115. It's the widest release of this week, on 3,500+ screens. Critics are mostly happy, with 67% approval on rottentomatoes.com, and many are absolutely in love with it. I'm not captivated - I'm not feeling the love from the trailer. But I don't want to bet against this kind of hype.
Update Sunday night: I had a moderately good weekend; I got three out of four stocks right but I only got 3 out of the 6 options right. My thinking on WILD could have been better - there was more potential on the downside than the upside. It did $32 million, which was very good, but still sort of what the market was predicting. $30 million was much more possible than $40 million.
The contrast between HSX and Cantor Exchange was interesting this weekend. HSX was closer on WILD, even though it was off. WILD had been dropping, and that trend was right. On Cantor, however, WILD exploded upwards; I shorted it at $115.25. Feeling really good about that right now. However, HSX was wrong STPFT and LACTZ; both had been drifting steadily down, but adjusted dramatically up, LACTZ by H$25, and STPFT by H$18. But both were trending up on Cantor by Friday, and the difference between HSX and Cantor was dramatic; LACTZ was trading in the $40's on Friday, while it halted at H$32. That's a 30% difference. STPFT also never dropped very low on Cantor, and was nowhere nearly as low as it was on HSX. PNACT
So Cantor was better on the stocks that went up (LACTZ, STPFT), but HSX was better on the one stock that went down (WILD). Interesting to note that. That was certainly true last week, when Couples Retreat adjusted up strongly, which HSX missed completely (as did I).
