HSX: Week of March 20, 2009

She's back! Julia Roberts, that is. After taking a break to raise her kids, America's Sweetheart is back with some intrigue on her mind. She stars in Duplicity (DUPLC) with Clive Owen, who recently starred in a similar movie, The International, with Naomi Watts. Hopefully Mr. Owen will have better luck with a more famous star; I can't even remember Naomi Watts in the trailer for The International, and it was not a smash. The signs are not great. The stock is at H$43, up H$2, but that's down from a high of H$51, and the trend is downward. The strike price for the options is H$15, just about dead on. The call is at H$3, but that's down more than H$1 today, really not a good sign. The put, meanwhile is just below H$2, marginally up today. The screen count is 2,575. So the stock, the call, and the put are all suggesting about $15 million. It needs a per screen average (PSA) of about $5,800 to make the stock price. One very good sign is that the critics are giving it props, with a 65% score on rottentomatoes.com. That makes me a little more optimistic. Let's put the prediction in the high teens, around $18 million. There's a reason Julia Roberts is one of the most actresses in the world.
Stock: Long
Call: Long
Put: Short

In the "bromance comedy" category, a new genre, is "I Love You, Man," (ILVUM), a comedy about a guy who needs to find a new best friend for his wedding. One thing bothers me about the trailer: he apparently works in LA, and he wears a tie. That's a true sign of a geek. I don't have much interest in it, but I can see the appeal. The stock is at H$54, down almost H$5 for the day, and down from a high of H$61. We certainly don't like that sign. Strike price is H$20, on target. Call is down more than a buck today to H$3.56. The put is up H$0.75, to H$2. Something similar to Duplicity seems to be happening here: the market is having second thots. Better keep a close eye on this one tomorrow morning. Screen count is 2,711. The stock price is predicting almost exactly a H$20 million opening. Needs a PSA of about $7,400 for that, very possible. Critics are heaping praise on this; it's scoring 77% at rottentomatoes.com. It could be a great excuse for a date movie. I'm going to go with the market and call it at $20-$22 million. Hitting the sweet spot between the call and put means shorting both.
Stock: Long
Call: Short
Put: Short

Next up is "Knowing" (KNOWI) about Nicholas Cage staring - what do you know - in some kind of supernatural thriller. Yawn. I can barely muster the energy to watch the trailer. How many movies like this has Nicholas Cage made? Too many for me to count, that's for damn sure. Just like our other two releases, the stock is down from its high. It's H$46, down from $H51, although it's trending slightly upwards. Strike price is H$15, and the call is, once again, down, to H$4. Quite a little trend we've got going here this weekend. Put is unchanged at H$1.22. It's going out of 3,332 screens, so the studio is optimistic. Critics are not; it's down in the basement at 21% on rottentomatoes.com. Time for a bad pun; I think this will be a "disaster" movie in more ways than one.
Stock: Short
Call: Short
Put: Long

Update Friday morning: All three stocks are down this morning, not a good sign. My gut is telling me that Duplicity is down to about where it will open, so I'm staying long. The reviews have just been too good. I Love You, Man, is down H$1.50, which feels like normal noise. Knowing, on the other hand, looks like a bomb in the making.

Update Sunday night: I was mostly right about DUPLI and ILVUM, slightly too optmistic on both. The market nailed DUPLI, off by a grand total of 42 cents, with a take of $14 million. Predictions were off for ILVUM by about H$4; the take was $18 million. But we all sold Nicholas Cage way too short. KNOWI adjusted north by H$22, with a healthy $24 million for the weekend. Why do I always need reminders that the market can be tragically wrong? I also need to be constantly reminded that the danger in shorting is that there is usually more upside potential than downside. Particularly with an A-list star. My bad.