G-Force (GFORC) is a family action-adventure movie, insofar as that hybrid exists. The "G" stands for "guinea," as in pigs. The stars are some guinea pigs who are also secret agents. My guess is that the government experimented on these guinea pigs (get it?) to make them into these superheroes. It looks funny, and Disney has a good track record with these kinds of things. The stock was moving up quite well for a while, but then crashed, as movies in the summer are wont to do. It's been moving back up since then, and is currently around H$70, or an opening weekend of about $26 million. By almost no coincidence, that is also very close to the strike price, which is H$25. The call (GFOCA) is trading high, up almost H$5, way above the prediction of the stock. The put (GFOPU) is not doing too badly, at about H$2.50. So we have slightly mixed signals here. Fortunately, we have another HSX indicator. The strike price for the Blockbuster Warrant (BWGFO) is H$70, and is currently at H$9 and change. The BW's will cash out on September 7, roughly six weeks from now, or two weeks after this delists. It's going out on almost 3,700 screens, and it's being released in "Disney Digital 3-D," a good marketing ploy. However, it's at only 21% on rottentomatoes.com. There are only 14 reviews, but that's pretty bad. Thinking of the demographics, those are actually pretty limited. Kids older than about 10 will probably be turned off. That narrows the range considerably. Variety, however, is optimistic about its potential, and the folks at Variety are very good at this kind of prediction. Let's go long, but look at it more closely tomorrow morning.
Stock: Short
Call: Long
Put: Long
Blockbuster Warrant: Long
Note: Positions were reversed Friday morning (see below)
Next we have Orphan (ORPHA), a horror movie about a little girl who is not quite what she seems. Of course, she is probably exactly what she seems on the poster, which is a standard evil-child horror movie character/plot device. It's at H$28, just off its high, after a steep recent climb up. The well-chosen strike price is H$10, right on target. The call (ORPCA) is H$3.56 as I write, while the put (ORPPU) is at H$2.39, down for the day. Again, mixed signals. It's a nice wide release at 2,750 screens. That generally means the studio has some confidence in it. The reviews are not great, but not bad, at 45% on RT. This doesn't sound like it has great buzz, but expectations and the prices are quite low to begin with, so let's stay long, but, again, watch it tomorrow morning.
Stock: Long
Call: Long
Put: Short
Now we come to the fun part: Katherine Heigl in a romantic comedy, The Ugly Truth (UGLYT). As far as I am concerned, that phrase, "Katherine Heigl in a romantic comedy," is a major selling point. Based on the trailer, I'm not completely sold on her acting in this movie, but that's only one of the features. Gerard Butler is the guy, and he could be good, although I haven't seen him in much. The stock, however, is not doing well, down to H$66 today, from a high of H$78. Things that make you go "hmmmm." Strike price is H$25, which, again, is a good price. Call (UGLCA) is doing well, almost H$4, with very little downward movement. The put (UGLPU) is, as expected by the price of the call, below H$2. It's on almost 2,900 screens, so the studio is feeling good. The reviews, however, are brutal, and it's at only 11% on RT, and Variety is not impressed. I like romantic comedies, but I like romantic comedies with at least one character who is living life on their own terms. It looks like Butler is fulfilling that role here, but I also like romcoms with a huge obstacle separating the characters, some basic fact of their respective lives keeping them apart. Romantic comedies with a main character as a criminal (Out of Sight, Grosse Pointe Blank, Thomas Crown Affair) work well because of this. That's a gimmicky gimmicky plot device, but those movies work. The wall-separating-lovers motif is also why Romeo and Juliet is still around. Love means that much more when its tested by a harsh reality. It looks like all that is separating these two is the fact that they start out not liking each other. Keep working on it, Katherine. I'm keeping the call long because of the possible upside, but going long on the put as well.
Stock: Short
Call: Long
Put: Long
Update Friday morning: GFORC is down H$4.50 this morning. I'm reversing my position on the stock and shorting it. ORPHA is up, and UGLYT is down, confirming those positions.
Update Monday morning: Looks like I was a shade too pessimistic. GFORC had a solid $32 million opening weekend, adjusting up H$15, while UGLYT also did well, adjusting up H$9 on a $27 million opening weekend, and ORPHA adjusted up H$4, on $12 million. I guess I shouldn't have doubted either Katherine Heigl in a romantic comedy, or Disney's ability to work magic with animated rodents.
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