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Playing & Trading Strategy

For wide releases, there's usually four ways to play the opening weekend and beyond (more)

Posted by: bchicken on May 08, 22:25 in response to jms2's post It’s been awhile but what’s the best way to...

The moviestocks themselves work the same way they always have - they cash out at $1 per million of gross made after 4 weekends (wide releases) or 12 weekends (limited releases).  There's just no adjust after the opening weekend any more.  So post-release it's a question of what you think the legs of the film is going to be.  I'm a pessimist, so I usually guess a film is going to end up at around 2.5 times the opening weekend and long/short accordingly.

In addition to the stock itself, now there are opening weekend derivatives for most wide releases.  Most get an opening weekend derivative the cashes out at $1 per million made opening weekend.  Bigger releases usually get a pair of call and put options, where you bet on whether you think the opening weekend gross is going to be above (call) or below (put) a certain strike price. 

For example, this weekend the Dr. Strange movie had all three derivatives.  The numbers will change a little when the official totals get reported, but based off the weekend estimates:

  • The opening weekend warrant (DRST2.OW) will cash out at $185/share.
  • The $160 call (DRST2.CA) will cash out at $25/share ($185-160).
  • The $160 put (DRST2.PU) will cash out at $0/share (since it was over 160).
If it had made only $100 million this weekend, the OW would have cashed out at $100, the call would have cashed out at $0 and the put would have cashed out at $60.

   Hope this helps!





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