Thursday, July 9, 2009

HSX: Week of July 10, 2009

Only two movies opening this weekend, both comedies. Let's get the easy one out of the way first: "I Love You, Beth Cooper" (ILUBC) is opening with the least amount of buzz for a wide release that I can remember. I have not seen any publicity whatsoever, which is strange in Los Angeles. I barely knew it was opening. The stock is at H$21, which is off of the high of H$27, but it's been climbing quite steadily. It's directed by Chris Columbus, who is NOT one of my favorite directors (he directed Bicentennial Man, which is one movie I am sure Robin Williams wishes was erased from the planet Earth). The strike price is H$10, which may have made sense a couple of weeks ago, but is now officially absurd. The call (IBCCA) is at H$1.74, surprising only in that it is above H$1. The put (IBCPU) is at H$3.30, which is a very bad sign. It's at 13% on, a really, really bad sign. Nary a positive sign in sight, really.
Stock: Short
Call: Short
Put: Long

Next up is Bruno (BRUNO), Sacha Baron Cohen's second alter ego to hit the big screen, after Borat. This could be either a huge hit or not so huge a hit. It will make a lot of money, the only question is whether it will make massive amounts, or just lots. The subject matter is stirring up strong reactions and controversy, which is not necessarily a bad thing. It's at 70% on, and we love that. I've laughed quite a bit at some of the trailers, so I am planning to see it, although I am not quite sure what to think of how politically incorrect it is. At least one gay friend is seriously bothered by it. I am reserving judgment, but I do plan to see it. The stock is at H$108, down from H$124, but holding up. The strike price is H$40, which is exactly in line with the stock price. The call (BRUCA) is at H$5+, but the put (BRUPU) is at H$3.30. I am not surprised at these split signals, given how controversial the movie is. The stock is predicting an opening of $40 million, the call $46 million or higher, and the put about $36 million or lower. I think the call might be on the high side, but I'm going to keep it long, because of the danger of too much upside. I have one reason for optimism in particular: Borat opened on only 837 screens, but did $26 million. With a lot more screens, and much more publicity, I think Bruno could do much, much better than that.
Stock: Long
Call: Long
Put: Short

Update Sunday night: Looks like I picked the wrong week to believe in outrageous British satire. BRUNO had a solid opening on Friday, $14 million. It looked like it would meet the strike price, if not much more, but then it plunged on Saturday, and only would up doing $30 million for the weekend. So I got burned on all three securities. ILUBC, however, tanked as expected, so that made up for it a little bit.

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