HSX: Week of April 10

Three movies coming out this weekend, but not a lot in the way of quality, or at least seriousness. First up Dragonball Evolution (DRGNB), based on the animated series of the same name. I've only seen a couple of scenes from the series, but I was seriously underwhelmed. The animation is very quality, about as cheap as possible. Scenes largely consist of a character or characters not in some action pose but not actually moving. Only their mouths are moving as they are talking. This is an incredibly easy way to produce animation - copy one cel multiple times, only changing the characters' mouths. Not particularly interesting, in my opinion, but also not that unusual - watch The Flintstones, and you will see something similar. Speed Racer uses the same approach. It works for Saturday mornings. The stock is about as cheap as the animation in the predecessor series, trading at H$20, down from a high of H$58. That's a pretty serious evaporation of hype. It's down H$2 today. The strike price is H$10, which at this point is laughable. The call is sinking fast, as it should. The put is at H$4, a rarity, particularly for a strike price this low. Say goodbye to this Japanese import.
Stock: Short
Call: Short
Put: Long

Next up is Hannah Montana: The Movie (HANNA). I know two things about this movie: Miley Cyrus seems to be a cultural phenomenon with few equals, and I am not going to see it. The stock is trading at H$76, which seems really high, but is right around where it's been for a while. The screencount is 3,118, about what I expect. It would need to make $9,000 per screen to make the price. That's entirely possible. Strike price is H$25, with the call fairly high, above H$6, and the put below H$2 and sinking fast. The call is down almost a buck today, and the stock is down H$3. The Jonas Bros. movie was a major disappointment. I'm not sure Miley is going to live up to the hype. There is much more room on the downside than the upside.
Stock: Short
Call: Short
Put: Long

Last and probably not least is Observe and Report (OBSRV), the second of the year's "mall cop" movies, after Kevin James' "Paul Blart: Mall Cop." That one did extremely well, pulling in well over $100 million. I'm not so optimistic about Seth Rogen's chances. It seems a little dark, and I'm not quite sure where the humor is. Stock is at H$44, down H$2 today, and down from a high of H$60. The strike price is H$15. Call is at H$5, but down. There's a serious imbalance between the price of the stock and the call. It would have to clear $20 million to justify the price of the call, which would mean the price of the stock would be H$54. The put, meanwhile, is only about a buck and a half, but it's up today. My observations lead me to report that this is not looking great.
Stock: Short
Call: Short
Put: Long

Update Sunday night: Well, two out of three ain't bad. This was an unusual week for me: I shorted all the openers. One of those was a mistake: Miley Cyrus is all that, as she opened with $34 million. I was betting against a very high call, which was not a good idea. On the other hand, I also bet against a high call on OBSRV, and that worked out quite well; it only cleared $11 million, well below the strike price. Dragonball Evolution was, as I predicted, a bomb, with a rather disappointing take of just $4 million. I shorted it way back when it was H$48, so I made a bundle off this stinker. The lesson of the week would seem to be that it's a bad idea to bet against Miley Cyrus, but not to worry about betting against a high call. I made H$15 on OBSRV, but lost H$16 on HANNA, and then made H$6 on DRGNB, so it was a positive week overall.