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 have three movies opening this weekend, two horror movies and a movie about Facebook.
Renee Zellweger stars in Case 39 (CAS39), a horror movie about a case worker whose 39th case is a little girl who isn't quite as innocent as she seems. The trailer scares me, but since that isn't hard to do, that isn't saying much. I haven't heard much about this movie, haven't seen any marketing, but the stock is skyrocketing like I haven't seen in a long time. It's up several hundred percent in the last couple of months. THAT'S interesting. It's at H$12 and change on Friday morning. There aren't even options, that's how depressed the stock was until recently. RT score is 23%. So it looks like the studio had an opportunity to release it, so they grabbed it, hoping to make some money. I have a feeling it's had a great run, but the hype is peaking.
Stock: Short
Let Me In (LTRON) is a remake of a Swedish vampire movie called Let The Right One In, which apparently was quite successful. Halloween is right around the corner! This is not doing quite so well, and the stock is tanking, down to H$31. Strike price is H$15, which seems optimistic today, and the call (LTMNCA) is H$1.35. Put is at H$3.43. Critics are quite enthusiastic, with an 83% rating on RT. Now that some hype has been wiped out from the stock price, I see more potential on the upside than the downside. But I'm not optimistic that it's going to make the strike price.
Stock: Long
Call: Short
Put: Long
Then there's this little movie called The Social Network (SOCIL), about some dweeb who decided that he wanted to help people make friends. Such a good idea! We all know and love Facebook, don't we? But how many of us will love the movie about it? Stock rose quite steadily to the low-H$90's - high H$80's, which is where it is parked now. Strike price is nicely priced at H$30, and the call (SOCICA) has lots of friends, and H$3.43, while the put (SOCIPU) does not have quite as many friends, but is not doing too badly, either, at H$2.91. We have mixed signals here. Except from the critics, who are almost universally enthusiastic, raving and giving it a 97% rating on RT. This has the potential to be the kind of movie that feel like they have to see to be part of the cultural conversation.
Stock: Long
Call: Long
Put: Short
Well, it wasn't a great weekend, either at the box office, or here at TEQP-HSX. The Social Network didn't soar quite as I expected, only picking up H$23 million, and adjusting down H$18. Case 39, the one movie I didn't think was going to do well, actually did marginally better than expected, with $5 million in the bank, and actually adjusted up a bit, to H$14. From the numbers being reported now, it did better than the other horror movie opening this weekend, Let Me In, which had a lot more hype. That only did about $5.3, and it adjusted down quite a bit, from H$30, to H$14, i.e. by more than half. Thank goodness I got the options right on that one, or I would have gotten everything wrong this weekend. This a humbling experience pretty much every week.
I'm doing an abbreviated post today, and a day late, because I am dealing with some family stuff that requires my attention.
Easy A: Up recently, but down today. Great reviews, at 82% on RT. Strike price is H$15, and the call is doing well, while the put is below a buck. Stock: Long Call: Long Put: Short
The Town: Same as Easy A: Up recently, down today. Even better reviews, at 92%. You go, Ben Affleck! Same strike price, although there is more of a disconnect between the options and the stock. Stock: Long Call: Long Put: Short
Devil: Down quite a bit recently, not a great sign. From M. Night Shyamalan, although he didn't direct it, and his brand isn't what it once was. Same strike price, but with opposite movement. Stock: Short Call: Short Put: Long
Alpha and Omega is dropping off a cliff. Same strike price again, although it's completely ludicrous. Looks utterly cliched. Stock: Short Call: Short Put: Long
Update Sunday afternoon: Not a bad weekend, considering my abbreviated post. Ben Affleck did quite well, with The Town very nicely exceeding expectations, with $23.8 million, adjusting up almost H$20. Easy A did well, but not quite as well as expected, with $18 million, adjusting down about H$5. At least it beat the strike price. Devil and Alpha and Omega didn't, although the cartoon did slightly better than expected, and adjusted up a smidgen. That means that I got almost everything - 10 out of 12 - right.
It's the dog days of August, and that means slump time. Dumping time. Get rid of all your trash before the fall starts. So we're not real excited about the movies coming out tomorrow. But we're going to do our best to evaluate them.
The first shall be last, and the last shall be first. Thus the first movie up this week is The Last Exorcism (LXORC). It's a horror movie about a priest and an exorcism. Always good for some scares. The stars - such as they are - are total unknowns, as is the director. At least they are all total unknowns to me. Of course, this may be because I have zero interest in horror movies. I do have an interest in this stock, which has been climbing quite nicely and steadily. It's at H$40, down just a bit from the high of H$44. Strike price is H$10, which is absurdly low, given the stock price. So we have a situation once again where the options are not hard to predict. The call is at H$6 and change. Haven't seen that for a while! The put is at H$0.57. Haven't seen that in a while, either! It's going out on 2,800 screens, which is a good solid release. Critics are pleasantly surprised, with a 65% rating on rottentomatoes.com. All signs point to some good potential on the upside, like $14-$16 million.
Stock: Long
Call: Long
Put: Short
Not quite as many people are taken by Takers (TAKER) the other big opening this weekend. This does have a cast of recognizable stars, but not really anyone who can open a movie. Didn't we just see Matt Dillon in a heist movie? Didn't we just see Zoe Saldana in a cheesy action movie? Stock is at H$28, and the strike price is, again, H$10, although this time that is dead-on. The call is slightly outpacing the stock - it's closing in on H$3. The put is closer to the stock, just below H$2. It's going out on 2,200 screens, so the studio is playing it a little safe. Critics are not enthused, with just a 29% approval on RT. Not expecting any surprises here, in either the movie itself, or the box office. I'm guessing it has some marginal room to move on the top, but I'm looking for the sweet spot on the options, right around the strike price, at $10 million.
Stock: Long
Call: Short
Put: Short
Both stocks are up this morning a shade over H$3. Looking good for the last week of August. Maintaining all positions.
Two nice surprises this weekend. Both movies opened at aboout $21 million, way above the strike prices, and, for Takers, way above the price predicted by the stock, although the momentum was clearly up. The only prediction that I missed was the call on Takers, but it's always very risky predicting the sweet spot. Otherwise a very good weekend.
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.
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.
Two movies opening this weekend, both pretty normal. The Oscars are in a couple of weeks, and that weekend will soak up moviegoers' attention, so I'm guessing that studios are dropping deadweight into the space just before that.
Kevin Smith has directed a movie about two cops called - get this - Cop Out (2COPS). I'm not a big Kevin Smith fan. Couldn't finish Clerks. I liked Dogma, but recognize that it's not a very polished film. This is the first movie that he has directed that is not from his own script. He may be thinking that it's time for him to grow up as a filmmaker, although no bets on that one. One can only stay a fanboy forever, although he is certainly stretching it out. The stock is currently in the mid-50's, down from a high in the mid-60's, and it has been edging downward for some time. The strike price is H$20, just right, with the call (2COPCA) doing well at H$3.30. The put (2COPPU) is above IPO, at H$2 and change. The CX derivative is just a smidgen below the stock. On Cantor, it's at $60, not terribly surprising. So all signs are pointing, so far, to a $20 million weekend. Except the score on rottentomatoes.com, which is at 13%. I couldn't find anything even remotely entertaining about the trailer, let alone funny. Smith is a smart man, but he's not a particularly disciplined one. He has enough of a reputation to attract his fan base, but I don't think he's going to get much beyond that.
Stock: Short
Call: Short
Put: Long
CX on HSX: Short
Cantor: Short
Also coming out this weekend is what looks - to me, at least - like a generic horror movie, The Crazies (CRAZI). It's a remake of an old George Romero movie. I've never heard of the original, but that doesn't mean much. Stock is at H$42, which is a high. It's been moving up steadily. It's going out on 2,476 screens (2COPS is going out on 3,500, which I think is more of a desperation move than anything). Strike price is H$15, again, just right, with the call (CRAZCA) heading northward, at H$3 and change. The put (CRAZPU) is below the IPO, another good sign (although just barely). The CX derivative is at H$38, which is something to keep an eye on. What's particularly interesting is the critics' perspective: it's scoring an eye-popping 88% on RT. Ain't It Cool News is hosting a screening with the director tomorrow (that would be Breck Eisner, son of Michael, ex-chairman of Disney), which sounds like marketing heaven. Something about this movie sounds like it is going to be bigger than expected.
Stock: Long
Call: Long
Put: Short
CX on HSX: Long
Cantor: Long
Update Friday morning: Both of these movies are down on HSX and Cantor this morning, although 2COPS is down more, almost H$4, while CRAZI is down H$2.66 at the halt. That much of a drop confirms my opinion on 2COPS - that's a strong indication that it is going to bomb. I read a couple of positive reviews this morning, one in the LA Times, one in the LA Weekly, and a friend of mine thot the red band trailer was funny. But that same friend also expressed more interest in CRAZI. They're competing for the same audience, young men, but it sounds like CRAZI is a better movie. The drop for 2COPS comes on top of mucho negative publicity, so it confirms my opinion. CRAZI still has its fans, although it's at 72% on RT. That's still quite good. expectations are still fairly low, so I'm still going long on CRAZI.
Update Monday morning: My predictions were quite good this weekend, as were the markets'. 2COPS brought in $18.5 million, and adjusted less than H$1, to H$50.13. So I got all of those predictions right. CRAZI came in better than the market expected, but right around where I was thinking, at $16.5 million. Again, I nailed it. 2COPS had a per-screen average of $5,894, while CRAZI had a PSA of $6,572, so it did better on that score. I am staying short on 2COPS, but holding CRAZI long to delist. 2COPS had a lot more screens this weekend, but that means that there are a lot more screens to pull next weekend. Since CRAZI had a higher PSA, theaters have slightly more incentive to keep it on their screens. We'll see what happens.
Happy New Year! We're in the middle of Oscar season, which means good movies. But we're also in the early part of January, which usually means bad movies. Studios tend to release clunkers in January, because there are so many big movies left over from the holiday season. So having a release date in January is not a good sign for a movie. OTOH, it's possible that some studios are reversing this trend, because they know that the other studios are releasing dreck, so they competition is weak in that sense.
One possibly good movie is Leap Year (LEPYR), the usually wonderful Amy Adams in a romantic comedy. I buy her as a romantic lead. I'm not sure why a movie called "Leap Year" is being released two years before a Leap Year, but maybe they wanted to make it ASAP. The stock has been rocketing up lately, presumably after an actual release date was announced. It's up slightly today to H$32, near a high. Strike price is H$10, which makes perfect sense. The call (LEPYCA, one of the first of the new six-letter options) is treading water, but just barely. The put (LEPYPU) is marginally higher. On Cantor, the stock is up $3 today. However, the critics are savaging it, with only 18% approval on rottentomatoes.com. The expectations are quite low, so I am going to go long. Stock: Long Call: Long Put: Short Cantor: Long
Moving away from the cheesy romcom to the cheesy horror thriller, we have Ethan Hawke in Daybreakers (DAYBR). Again, lots of movement upwards, with a recent dip. A little more serious drop, from H$49 to H$39. Call (DAYBCA) is up to H$3, against a strike price of H$15. Put (DAYBPU) is above the IPO, but not much, so there are mostly good signs from the derivatives. CX on HSX is at H$46, down of late. It's marginally higher on Cantor, but about the same as the CX. Interestingly, it's doing well among critics, at 65% on RT. Vampires rock these days. Stock: Long Call: Long Put: Short CX on HSX: Long Cantor: Long
Michael Cera, who is, oddly enough, becoming a movie star, stars in Youth In Revolt (YRVLT) as a both a young geek and his alter ego. If anyone can pull this off, I'll bet he can. Stock has been rocketing up, but is down today, to H$24, from H$27. This is for anyone who needs a coming of age story. Strike price is relatively optimistically set at H$10, with the call (YRVLCA) right back at the IPO price. Put (YRVLPU) is, what do you know, above the IPO, at two bucks and change. This has to be a good movie to actually make money. Fortunately, it looks like it might actually be quite funny; critics are liking it, with 68% approval on RT. My guess is that the studio knows it has a good movie, and is willing to let it build by word of mouth, and that it will take off as the holiday movies fade. The CX derivative is on basically the same tragectory as the stock. On Cantor, it's been really high, and is sinking from the ridiculous price of $45 or so. But it's now down to $29, so it might be time to reverse my short. Stock: Long Call: Long Put: Short CX on HSX: Long Cantor: Long
I was a shade too optimistic, but not by much. Daybreakers came in almost right on the nose of both the strike price and the stock price, right at $15.0 million. The stock adjusted from H$40.61 to H$40.50, down a grand total of 11 cents. Let's pat ourselves on the back, traders! Leap Year came in at just over $9 million, adjusting down H$4 1/2. Youth in Revolt performed as we expect an indie coming of age comedy to, at $7 million, down H$2. I got a couple of puts right, and most other predictions wrong, but not by much. Pretty much a wash. We'll be back next week.
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.
A nice broad range of movies this weekend, although nothing I am all that excited about for myself.
First up is Astro Boy, (ASBOY) based on a Japanese cartoon. I know next to nothing about this cartoon. I'd never heard about it before. I haven't seen any marketing besides the trailer, but since I am several steps removed from the target demo, that is not surprising. What I do know is that the stock is tanking. It reached a high of H$57 earlier this year, was at H$57 earlier this month, and is currently down to H$32. That's a precipitous drop. So this boy can fly - and that's special because . . . ? I also just noticed that the IPO date was Oct. 11, 1999. So this stock has been around for ten years. Talk about development hell. Strike price is H$15, very high for this stock price. Call (ASBCA) is at H$2.65 and dropping, while the put (ASBPU) is going the opposite direction, and is at H$2.52 . It's going out of 3,000 screens, but I don't think that's going to do much good. It's well with critics, with a 70% rating on rottentomatoes.com, so that is something to consider. So it might surprise on the upside, but I doubt it. It is trading very differently on cantorexchange.com, and that is a strong counterindicator. But I would be surprised if it does more than $12 million.
Cirque du Freak is another movie based on a popular children's movie, and, like Astro Boy, I've never heard of it. Also like Astro Boy, the stock (VAMPA) is tanking, down from a recent high of H$41 to H$22. The strike price is H$10, which is a little more reasonable, and the call (VAMCA) is trading high, almost at H$3. The put (VAMPU), however is also above H$2, although only about a quarter above. It's going out on 2,700+ screens, but the critics are savaging it, with only 25% on RT. It's marginally higher on Cantor, but only about $30. That sounds realistic. Vampire fans have lots of material to choose from these days. I think $9-10 million is about right.
Stock: Long, but only because it's down so far already
Call: Short
Put: Short
Saw 6 (SAW6) is the latest entry in this particular horror franchise. Every other studio must have a lot of respect for Lionsgate, because most of them released their other horror movies well before this one. Stock is at H$71, near its high. Strike price is at H$30, which is about right for this franchise - that's where several of the last of these movies have debuted. But the call (SA6CA) is above H$3. That doesn't sound right, because franchises like this eventually wear out their welcome. The put (SA6PU) is also going up, aiming at H$3. I'm sure it's going out on lots of screens. Yep, 3,000+. But it also has competition; Paranormal Activity is still at the beginning of its hot streak, and that could take lots of business from this movie. I have no idea what critics think of it, because there are no reviews on RT. That would be because it hasn't been screened for critics. Never a good sign, although it probably doesn't matter much this time around. This is a twist: the price on Cantor is way below the price on HSX. That's different. It's around $60 on Cantor. So HSX is predicting $26 million, Cantor around $22 million. I'm thinking somewhere around $22-25 million.
Stock: Short
Call: Short
Put: Long
To round out the weekend, there's the heartwarming tale of Amelia Earhart, "Amelia" (AMELA). The stock is tanking, it's down to H$18, from a high of $42, and the critics are not impressed (30% on RT). Strike price is H$10, with the call (AMECA) barely over a buck, and the put (AMEPU) is soaring, like the legendary aviator herself. It's only going out on 800 screens. It's at roughly the same price on Cantor, in the low $20's. But I think all those signs are wrong. This is one time I am betting strongly against the market. This is the second biopic of a famous 20th century woman, played by a multiple-Oscar winning actress, this year. The other was Meryl Streep in Julia & Julia. That was a solid movie, although I didn't care for the part with Julie Powell; I though it was very badly written. That did quite well, and it may be a better movie than this one. But for all her charm and sense of adventure, Julia Child was still playing around in the kitchen. Amelia Earhart took risks that no other woman had ever taken. In terms of an inspiring story, she has few equals. I think Hillary Swank is perfectly cast. There are people out there who will see this movie, and not another movie for months. It doesn't really matter how good it is; it just has to be decent. It may very well be a maudlin tearjerker. But it is also a one-of-a-kind movie. It's the only movie about her that I know of. So I am going all in.
Another interesting weekend at the box office. I got a couple of things right: I nailed ASBOY ($7 million) and SAW6 ($14 million), getting all three right. Both of those adjusted down. I was wrong about VAMPA ($6 million) and AMELA ($4 million), because both of those adjusted down, as well. I was right about VAMPA's call, and that put me above .500 for the weekend - I got 7 out of the 12. Most fortunately, I got the big one right - SAW6 only pulled in $14 million, and adjusted down by H$30.
There were a couple of great lessons learned this weekend. First, the quality of a film really does matter - AMELA got bad reviews, and that was reflected in the box office. I'm not a big fan of Mira Nair, and I should have taken that into account. Second, this whole business of "branding" movies, i.e., making movies either as part of a franchise or based on other works, is not going so well. Three of the four movies this weekend fit that definition. SAW6 is, obviously a sequel. ASBOY is based on a decades-old cartoon. VAMPA is based on a series of kids' books. The fourth movie, meanwhile, is based on a famous person's life. In other words, there is not an original idea among the four. The one movie that was based on an original idea - PNACT - swamped them all, taking $22 million. I've said it before, and I will say it again: the best way to make money in the movie business is to make a good movie. Period. End of story.
Another lesson, more of a reminder, really, for me, was that each movie has to be considered mostly on its own merits. I have to put myself in the shoes of a hypothetical moviegoer - would I pay $10 to see this movie?
The very last lesson from this weekend is that screen counts count - AMELA only opened on 800 screens, which I am sure depressed the box office. It was also not a strong sign from the studio.
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).
We have an interesting assortment of movies this weekend. No more summer blockbusters, but all solid possibilities for entertainment. There might even be an Oscar nomination in here somewhere.
First up is Cloudy With A Chance Of Meatballs (CWCMB), one of the best titles for a movie ever, based on a children's book of the same great name. It's animated, naturally in 3-D, as so many animated movies seem to be these days, and basically destined to attract lots and lots and lots of kids. Pancakes falling from the sky? How cool is that? Way cool, if you're 7. Still fun, even if you're 70. The stock is at H$72 today, up about H$2. That's down from a high of H$84, but many stocks are down from the highs they hit in August, so that's not surprising. The strike price is rather optimistically priced at H$30. That made sense when the stock was above H$80, not so much today. H$73 predicts an opening weekend of about $27. The call (CWCCA), not surprisingly, is not doing all that well, right at the IPO price. The put (CWCPU) is, on the other hand, doing quite well, aiming at H$4. It's opening on 3,119 screens. Critics are loving it, with an 88% fresh rating on rottentomatoes.com. I think we should be prepared for a nice surprise on the up side. "Up" made $68 million on its opening weekend. It had the Pixar brand going for it, but not quite as obvious a marketing hook. This looks like a seriously fun movie. I'm going with $30 million or more.
Staying in the comedy genre, but this time with real actors playing real people, we have The Informant! (INFOR), complete with exclamation point. It's the true story of a guy named Mark Whitacre, who wanted to blow the whistle on his employer, Archer Daniels Midland, and how they were messing with various markets for various things made from corn. We know what happened (although I'm not going to tell you), so there isn't a lot of suspense in the plot. But how does a story about accounting gone bad turn into a comedy? There aren't a lot of directors out there who could pull this off, but if anyone can, it's Steven Soderbergh. Matt Damon looks perfectly cast. The stock is at $32, down H$2 today, and way, way down from a high of H$47. Another victim of hype and post-August retrenchment. I've been waiting for this movie, and might see it this weekend. H$32 suggests about a $12 million opening weekend. The strike price is above that, at H$15, but the call (INFCA) is holding up, above the IPO. The put (INFPU), however, is doing better, above H$3. It's opening on 2,505 screens, scoring well on rottentomatoes.com (67%), and has some good marketing hooks, including a famous director and well-respected actor. But still, it's not the easiest movie to sell. I'm looking for the sweet spot between the options, somewhere around $12-14 million.
As usual, I don't know how to review this next one, because it's a horror movie, and I don't do horror movies. But Jennifer's Body (JBODY) stars Megan Fox, Hollywood's latest hottie, who is actually quite hot. Following the pattern of the week, this one has dropped precipitously in the last couple of weeks. It's currently around H$40, down from a high of H$57, but up slightly today. Ms. Fox plays a girl in high school who has been possessed by a demon, and is now a real man-eater - literally. It's gotten oh-so-much buzz, being the product of screenwriter Diablo Cody's imagination (Juno), but it's also on the receiving end of a backlash or two; it's only at 34% on rottentomatoes.com. The reviewer from horror.com, however, loved it, which has to be a good sign. It's on 2,701 screens, not the widest possible release, but solid. The call (JBOCA) has been on a roller coaster, as much as it could be one on in a week, way up, down, and now recovering to just over H$2. The put (JBOPU) has also had ups and downs, although it is strongly in the positive, roughly H$3 and a half. The plot sounds somewhat different, at least, which is sometimes enough to keep the buzz alive. Quite the alternative take on female empowerment! Besides, most of the reviewers are adults, and this is aimed very squarely at the pre-drinking age set. I'm thinking $15-17 million.
Stock: Long
Call: Long
Put: Short
Finally, we have a romantic comedy that looks like it has some heavy elements of a romantic drama, Love Happens (LVHAP). I don't think I really know which it is, comedy or drama, and I'm really not that interested in finding out. I loved Aaron Eckhart in "Thank You For Smoking," and I think Jennifer Aniston is attractive, but I can't say that I have ever found any of her performances inspiring. That may be because I haven't seen that many of her performances, because I haven't noticed a movie of hers that really grabbed my attention. Neither does this one. I can feel the sentimentality just oozing through the screen as I watch the trailer. Once again, the stock is down from its recent high, from H$33 to H$25, down H$2. Low expectations are being lowered. Partially by the studio: it's only going out on 1,800 screens, so Universal is looking to contain their losses. Critics are not enthusiastic, with only 23% of those posting on rottentomatoes.com finding the bright side of death and love. Strike price is very reasonably set at H$10, but it doesn't look like it will make it that high. The call (LVHCA) is below a buck, while the put (LVHPU) is floating above the IPO, at H$2 and change. There's not a lot of room below $10 million for a major studio release featuring an allegedly A-list movie star, so let's guess $7-9 million. Going for the sweet spot again.
In the interests of diversity and promoting independent and foreign film, and because I am intrigued by both of these movies, here are the trailers for two other movies opening this weekend, although in limited release. I don't predict opening weekend box office results for movies opening in limited release, because they don't adjust on HSX, but I like these two trailers. Bright Star is a period piece but about an intensely romantic life and story: John Keats, Romantic poet, and Fanny Brawne, the love of his very short life (he died at 25).
Dil Bole Hadippa, OTOH, is a Bollywood comedy about a woman who pretends to be a man to be able to play cricket. I had no idea cricket was so colorful or sexy.
Update Sunday night: Looks like I misread the market a bit; I thot that the slumps in stock prices among this week's openers was part of a general post-summer trend, but some of that drop-off was real, although there was only one real bomb this weekend, Jennifer's Body. Watch out for that backlash, Megan! CWCMB was the exception, opening at $30.1 million and adjusting up slightly. I got that one almost exactly right, although I was wrong about the call. Holding that long to delist. The market nailed the predictions for INFOR and LVHAP; both adjusted up less than a buck. We traders must be getting good at this or something. INFOR brought in $10 million, below my prediction. Got the call right, the put wrong on Mr. Soderbergh's latest. Again, long to delist. I got everything right about LVHAP; it brought in $8.4 million, almost exactly in the middle of my prediction, and I got both of the options right. Short to delist, because I don't think it's going to generate much buzz. Jennifer's Body, the aforementioned bomb, adjusted way down, bringing in a grand total of $6.8 million, and adjusting to H$18, down from H$37. I was completely wrong, and badly so.
Out of 12 predictions, 3 for each of 4 movies, I got 7 right and 5 wrong, but I missed the most important call of the weekend, for JBODY. Gotta remember NOT to trust my instincts when it comes to horror movies.
A mix of average and a little weirdness this week. Yesterday was 9/9/09, the perfect day to release a movie called "9." I forgot it was opening on Wednesday, sorry. So no predictions, although it looks interesting. Anyway, here's the trailer:
One trend of this week is that all the movies are off from their highs. I'm not sure if we are in a post-Labor Day Haze, or if we are in that lull between summer blockbusters and awards season movies.
One slight exception is Tyler Perry's "I Can Do Bad All By Myself" (ICDBA), which is at H$70, fairly close to its high of H$75. I'm not sure what it's about, but the trailer, short and simple as it is, is very funny. I try not to be against Tyler Perry. HSX has set the strike price at H$30, a shade on the high side, but not reasonable. The call (ICDCA) is doing well, almost at H$3, but the put (ICDPU) is almost exactly the same price. H$70 suggests an opening weekend around $25 million, so the call looks overpriced. But it's otherwise a slow weekend, so Perry's timing might be impeccable. His last movie, "Madea Goes To Jail," opened with $41 million. Like I said, I don't like betting against Tyler Perry.
There's yet another horror movie featuring hot young people being killed off; this time they're sorority sisters, hence "Sorority Row" (HSROW). As usual, I have no idea how to judge the appeal of these movies, so I am just going to go long, because H$27 feels cheap to me. Strike price is perfectly positioned at H$10. The call (SRWCA) isn't doing well, down slightly from the IPO, but the put (SRWPU) isn't all that great, either, at only H$1.35. The reviews are decent so far; it's at 63% on rottentomatoes.com, but that's only with 9 reviews. I'm going for the sweet spot between the two, right about $10 million. Someone isn't looking forward to this movie.
Last and, unfortunately, quite possibly least, is "Whiteout," (WTOUT) a thriller/action something or other that takes in Antarctica. That's an interesting place to set a movie. Geography automatically lends a certain amount of drama, but also presents some problems, not least of which is a lack of visually interesting landscape, as suggested by the title. Also, it means that all of the characters are going to spend large chunks of screen time bundled up, i.e. hiding their figures, although apparently Kate Beckinsale, the star, takes a shower. Eye candy and all that. The stock is heading south, along with the plot (sorry, couldn't resist), down to H$25, from a high of H$43. Expectations are being lowered right along with the temperature. Strike price is H$10, again nice call by DMac. The call (WHOCA) is following the stock, below the IPO, with the put going in the opposite direction, coming close to H$3. I don't think this will open below $7 million, so I am going to go for the sweet spot again, just below $10 million for the weekend.
Stock: Long
Call: Short
Put: Short
Update Friday morning: Sorority Row and Whiteout are both tanking. I have a new rule that I don't change positions on Friday morning unless a stock moves by more than 10%. But, since they are both doing that, I am reversing positions and shorting both.
Update Monday morning: Well, I should have bet against Tyler Perry, or at least against the overpriced options; his movie debuted at $24 million, a solid opening, but nowhere near $30 million. The stock adjusted down, by about H$7, not a bad fall, but a drop that I missed. All the other openers adjusted down, as well. I got the stock and the call right on Sorority Row, but I was not pessimistic enough about, so I missed the put. Both that and Whiteout opened at about $5 million, way off the respective $10 strike prices. No sweet spots for any of them. But I got Whiteout exactly right, so I got 5 out of 9 this weekend. 9 the movie opened slightly below expectations, and I was wrong on my picks in my portfolio, but since I didn't write about those here, I am not counting them. So I was above .500 for the weekend, but not by much.
OK, this is the kind of weekend August is famous for: a dumping ground for movies the studios don't know what to do with. Going against the counter-programming grain, the two big studio movies being released this weekend are both horror flicks. Isn't there a bad teen sex comedy sitting on a studio shelf somewhere? The other release takes advantage of the 40th anniversary of Woodstock, because of course there is always a shortage of Baby Boomer nostalgia in the world. The 60's! Again! Since there are still Baby Boomers alive, their youth is still being marketed to them. And the rest of us still have to live through it.
Question of the day: Why do we keep seeing sequels to a movie called "Final Destination"? Wasn't it "final" the first time? Apparently not, because "The Final Destination" (FDES4) (maybe the addition of a definite article means that it really is finished?) is the fourth in the franchise. Since I barely knew there was a franchise, I'm probably not the best person to comment on its BO potential. But the numbers are mostly good: it's on the requisite 3,000+ screens, the stock has been rising very steadily, to H$54, and the call (FD4CA) is up to H$3.56, against a strike price of H$20. The put (FD4PU) is below the magic price of a buck, so options traders are very optimistic about this one. I have no idea what critics think, because there is so far a grand total of one review on rottentomatoes.com. Not terribly surprising that it hasn't been screened for critics. Just based on the numbers, let's bet lots of teenagers will want to see their fellows whacked creatively.
It's hard to add another layer of artificiality and superficiality to a horror movie sequel, but someone just pulled it off: Halloween 2 (H2) is the sequel of a remake. Got that? Rob Zombie is finding ways to postpone any kind of original thinking in terms of character or setting. Just keep that franchise going any way you can! I can't wait for the "reimagining" of the remake of the sequel to the remake, which had lots of sequels. Oddly enough, this one is being released two months before Halloween. Marketing 101, anyone? Or would releasing the 53rd or whatever variation on the theme of Halloween on the actual day be just a little too cliched? Maybe we shouldn't think about it. The stock reached a high a few clicks above Final Destination, H$61, but has since drifted lower than its competition, and is down H$3 for today, to H$49. The call (H2CA) is close to H$4, but down a smidgen today. The put, however, is floating another smidgen above the IPO price, currently at H$2.13. So some traders are pessimistic. It's on roughly 3,000 screens, but there are even fewer critics at rottentomatoes.com, and fewer than 1, of course, equals zero. Sigh. There are only so many horror movie fans in the world, and the numbers suggest that they are going to be going to The Final Destination. It is in 3D, maybe blood coming out of the screen will make a difference. Releasing a movie called Halloween before Labor Day strikes me as a little too proactive.
Ang Lee has made a movie about Woodstock, "Taking Woodstock," (WDSTK) presumably because he believes that the 400,000 people who were there have not told their stories often enough to the several hundred million people who weren't, but who wish they had been. The trailer is charming, the cast is solid, and Ang Lee is a great director. But I have no interest. Maybe there are some Baby Boomers still hung up on their youth, but it doesn't look like they play HSX: the stock is tanking, down from a high of H$22 to H$17 today. The call (WDSCA) is following a similar trajectory, at H$2.39, against a strike price of all of H$5. The put (WDSPU) is around the same price. I'm shorting both, because I think the opening BO will be right around $5 million, right near the strike price, dead on between the call and put. I'm sure it will be an entertaining experience, because how could you not have fun watching one of the biggest parties ever? On the other hand, there won't be much drama, because we all know how it ended. We all know that really, really well. Stock: Short Call: Short Put: Short
Update Friday morning: FDES4 is tanking, down H$3, not a good sign. H2 is up less than a buck, which is noise, and not significant. I found reviews of both movies (from Thursday midnight screenings) on Ain't It Cool News. Both movies are apparently terrible, and these reviews will have an impact. FDES4 is spectacularly bad, and H2 apparently isn't much better. The fact that they are both sequels, and one is a sequel to a remake, sends the very strong, and very wrong, signal that Hollywood is not interested in making original movies. Which is really, really bad marketing.
So I am changing my position on FDES4, shorting it, shorting the call, and going long on the put. Keeping my position on H2, and not changing anything about WDSTK, because I don't think one day is going to change people's opinions about something that happened 40 years ago.
Update Sunday night: So my original decision on FDES4 was the right one, so I feel a little stupid. It made $28 million this weekend, confirming how little I understand the appeal of these movies. My other bets were right, H2 dropped, although just H$5, and WDSTK didn't quite break $4 million.
This is my second post on this blog! We have more interesting movies, both artistically and in terms of box office, this weekend. I have now added trailers!
Let's get the cheesy horror movie out of the way first. This week it's called "A Perfect Getaway (PGETA)," and features beautiful scenery as well as beautiful people - it's set in Hawaii. It's a decent B or C list cast (Milla Jovovich, Steve Zahn). Could be fun. I have no idea, since I don't watch these kinds of movies. The stock is right near the high after moving up quite well over the last couple of months. It's still only at H$22.75. Boxofficemojo.com is estimating the theater counts at about 2,000 (precise counts are updated Thursday afternoons), which sounds right. It's at 50% on rottentomatoes.com, with only 10 reviews. The critics are saying what I expected; it's OK, don't expect much and you won't be surprised. Strike price is H$10. That feels a little on the high side, but $5 would have been laughably low, so that works. With the stock predicting about an opening weekend of around $8 million, the options are not hard to figure out. The call, of course, is down to about H$1 (PGECA), while the put is at almost H$3 (PGEPU). I don't think this will bomb, but I would be surprised if it sees box office above $9 million.
We also have another blockbuster wannabe, General Infantry Joseph, or G.I. Joe (GIJOE), as is his nom de plaything. This certainly looks like fun. I have to admit that I have watched the trailer several times. It's efficient, well-edited, and strongly suggests that the action is very well photographed, with lots of great slo-mo scenes. Looks great! Doesn't sound so wonderful - this may be one of the few trailers in which the dialogue consists almost entirely of action-adventure cliches:
"The mission is a go!"
"I want in."
"A team is being assembled."
"I want the warheads ready to launch in one hour."
"This has just begun."
Dennis Quaid plays General Hawk. Of course he plays "General Hawk." He's not going to be playing "Colonel Pigeon." Channing Tatum is also in it, apparently playing Mr. Joe himself. The stock has been extremely volatile, crashing badly in the last couple of months, although it has regained some momentum of late. It's at H$144, which predicts an opening weekend of about $53. HSX positioned the strike price a little better than it did for PGETA. The options, interestingly, are almost exactly mirror opposites of each other, which is highly unusual. The call (GIJCA) is above H$4, as is the put (GIJPU). Critics are taking it for what it's worth - eye candy, with enough substance and plot not to insult the intelligence of the average teenager. It's at 75% on rottentomatoes, with 16 critics. I've heard rumors that it isn't been screened for critics, which would not be a great sign, but it looks like there are some who got to see it somehow. Critics aren't really going to matter much. The LA Times pointed out that Paramount is marketing this very heavily to "middle America," i.e. guys in the heartland who watch NASCAR. It's a patriotic thing. I'm going to assume that they know what they're doing. It's going out on oodles of screens, roughly 3,500. It feels odd to write this, but a $50 million opening weekend is almost diminished expectations. It's certainly nothing like what Transformers 2 did. The gadgets look cool, the men are buff, the women are hot, and the good guys win. What more do you need?
Stock: Long
Call: Long
Put: Short
Note: I reversed positions on Friday morning, so my positions are now this: Stock: Short Call: Short Put: Long
And now we come to art. Finally, a movie about a women who is a spy! Well, Julia Child was a spy (she worked in the Office of Strategic Services, predecessor of the CIA, in WWII), but she was, of course, famous as the woman who introduced America to French cuisine. Like they say, it's a dirty job, but somebody's got to do it . . .
Julie and Julia (JULIE) is one of the best examples of counterprogramming in a long time. Talk about a chick flick. It stars the queen of modern cinema, Meryl Streep, and one of the up-and-coming princesses, Amy Adams. The one problem is that it is directed by Nora Ephron, who is one of my least-favorite directors, in part because I think she completely botched Bewitched. Nicole Kidman as a silly wimp? That was just so wrong. Well, here's hoping she gets this one right. The stock has been on a tear, and today is at H$56, just down from its high. Teenage boys won't be interested in this, but women of a certain age certainly will. Options are nicely positioned, with a strike price of H$20. The call (JULCA) is doing well at $H2.52 and a half, but that's down almost H$1. So some optimism has faded a bit. The put (JULPU) is above H$3, so that H$20 strike price is looking endangered. Critics are moderately excited, with 64% giving it a fresh rating,l although none are wildly enthusiastic. I'm expecting a solid, comfortable movie, and that's what the critics are telling me. It will probably be on about 2,500 screens, easily enough for the non-G.I. Joe fans to see it any time they want.
Easily the best thing about this movie is that the marketing is a no-brainer. Dozens of action-adventure and horror movies are out there in the culture, with more and more being released every month. But there is and will be only one movie about a woman cooking every one of Julia Child's 524 recipes, and that movie stars Meryl Streep, Stanley Tucci, and Amy Adams. Even if I think Nora Ephron could use some help in the movie-magic department, her heart's in the right place. Sometimes passion makes up for skill. Julia Child is a little like Walter Cronkite and, in a weird way, Michael Jackson - a creature of television, fortunate enough to come along when it was still possible to be on TV and be one of a kind. She was 6' 2". She towered over most men. I don't think she'll tower over the men this weekend, but I expect some pleasant surprises. $25 million might be a bit much, but $22-23 sounds right.
Update Friday morning: All three are down today, and they are down by enough to make me question my optimism. I am reversing position on G.I. Joe: The Rise of Cobra, because I don't think Cobra is going to rise all that well. The reviews are trickling in, despite the movie not being screened for critics, and they are pretty bad. To make its numbers, this movie would have to expand beyond the teenage boy fanbase, and I'm not sure it's going to do that.
However, I am staying long on the other two. I still think Julie and Julia is a unique cinematic proposition, and Perfect Getaway doesn't have a lot of room to sink. There's not a lot of downside potential, just because the stock is already fairly low, but there is still some upside potential. If it turns out to be a good opening weekend, the stock might adjust upwards nicely, but it probably won't adjust downwards all that much if it sinks. So there is more potential for losses shorting it.
Update Sunday night: Looks like my first instinct on GIJOE was the right one: It opened with $56 million, which means I would have done well with my original predictions. Lesson of the day is do not reverse positions unless the signal is really, really strong on Friday morning. I did, however, get JULIE right; it came in at $20.1 million, almost exactly the strike. I could have made more money if I had shorted the call on JULIE, but my rule is that I count it as correct if the position is right, even if the amount is off. PGETA didn't even meet its very low expectations, but I got the options right. So I got 5 out of 9 this weekend, but I missed the big one, which was GIJOE.
