I've decided to try and do some regular blogging about the Hollywood Stock Exchange, HSX, because my post about the atrocity that was the HSX redesign attracted a lot of attention. Also, I'm not actually sure where there is much detailed discussion of openings. I liked the analysis at HSBR.net, but that's long gone, and the folks at the successor, ProjectGenome.net, don't do opening weekend analysis, as far as I can tell. The Numbers has lots of great stats and info, but not a lot of color commentary. Another HSBR spinoff, TheAmpersand.net, has lots of good trading advice, as well as some definitions. I don't need any of it, and I don't think the site has been updated in a while, but most of it is still relevant. If you need advice on how to play HSX, or how to play better, that's a good place to start. I am going to assume that, if you're reading this, you know how to play and have your own style and strategy.
My qualifications for analyzing securities on HSX are easy to enumerate: I'm one of the best players in the world. My current ranking is 229 (out of several hundred thousand), which puts me in the top 99.97%. My portfolio just topped H$2,000,000,000 (that's billion), which gives me a lifetime rate of return of over 101,000%. Probably my best investment ever is Watchmen (WATCH), which I bought at $.66, and which is now trading around H$183, which gives me a return just on that stock of 27,700%. I own every stock on the Exchange (usually about 1,400), every fund, usually about 200 bonds, and almost every derivative (I stay away from the TV-related ones). I have almost $H600 million in cash.
But enough about me. This week the openers are Twilight (TWLIT) and Bolt (BOLT). I noticed something odd about Bolt when I looked at the options. Normally I try to buy the options on the day of the IPO, but I was a slacker last week, so I checked them out today. The strike price for TWLIT and BOLT are both H$50, which is unusual - I don't think I've ever seen two strike prices that high on one weekend, but they don't have any competition, so it makes some sense. The calls are both trading high, BOLT is at $4.99, TWLIT at $7.59. For TWLIT, that makes sense, because the stock is trading around $160, so both the options and the stock are predicting opening grosses somewhere between $55 and $60 million. That sounds high to me, but I'm not a teenager, so I don't know how wildly popular this franchise is. I just remember thinking that the original Fast and Furious was wildly overpriced on opening weekend, shorting it, and then getting burned when it adjusted up by more than 50 points. So I am leery about betting against popular teen movies. I'm holding both the stock and the call long, and, of course, shorting the put. I'm a smidgen uncomfortable with this, because this means I am assuming an opening of around $60 million for a movie with stars I have never heard of. But I'm not a teenager, and the buzz has been building for a long time. I retain the option to change my mind, based on what happens Friday morning. That's key. A major move on Friday morning is a great signal on where the movie is headed. The Matrix shot up something like $10 on the Friday it opened.
The BOLT securities, on the other hand, are sending conflicting signals. The stock is trading at $125, and its high is $142. So the call is predicting an opening of about $55 million, but the stock is predicting an opening of about $44 million. One of those is wrong. I think it looks like a funny movie, and I am hesitant to bet against Disney animation, particularly now that they have absorbed Pixar. But I am a firm believer in not betting against the market unless you have a really, really good reason to. It's possible that the market is undervaluing this because it's a family movie, but I doubt it. Disney and Pixar are very well-known quantities. I'm shorting the call, but going long on the stock and the put. In other words, I think it's going to make somewhere between $44 and $50 million.