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Tracking the Cantor Index Spread:
Week Three

By Reagen Sulewski

August 9, 2001




In my last Cantor column, I stated that after Planet of the Apes, I was unlikely to see a similarly profitable result again any time soon. If there's a good way to be wrong, this is it, as Rush Hour 2 surpassed the 13.5-point jump that Planet of the Apes achieved for its opening weekend. With a settlement at $67.5 million, my long bet on Rush Hour 2 at the buy spread of $42 million gives me a 25.5-point jump. With my £20 bet, this is a cash-out at £530 (25.5*20 + my original bet). This is more than my initial stake! This, of course, also reveals one of the major risks of spread-betting. A short bet on Rush Hour 2 would have more than drained my 15 times margin and Cantor would have been in their rights to call in such a margin (although with several still very profitable bets yet to cash out, I suspect some leeway may have been granted. I honestly have no experience with their policies). After being burned (in a positive way) on my prediction of a less-profitable week than previous, I'll go out on a limb and say it won't happen a third time. It worked well enough for me last week.

The record-breaking opening of Rush Hour 2 also carried over positive effects to my long position on Rush Hour 2's four-week take. It jumped from $112 million at my bet placement to its current sell position of $179 million. What I said above about the potential for disaster the other way goes triple here, as this has come very close to testing the 100-point limit that Cantor has set for these bets. This is about the time in any Vegas movie where the pit boss hands me tickets to a show and comps me a free room. A 67-point jump on a £15 bet is already showing a paper profit of £1,005, more than twice my initial stake. It would be difficult for me to imagine a more successful start to this experiment, unless it was real money. The best way to picture me at this point is as Daffy Duck diving into piles of treasure, yelling, "I'm rich! I'm rich! I'm fabulously well-off!" These two wins also allow me to greatly increase the size and amount of my wagers, as my margin account becomes that much larger.

Stepping back from the celebration here, it's time to examine this position. A $184 million total represents a four-week multiplier of 2.73. Although respectable for such a high-opening sequel, I feel that this number undersells what the movie is capable of doing. Word-of-mouth has been very favorable, with CinemaScores hitting As across the board for all age and gender brackets. This film now has the chance to chase Shrek for the number-one box office earner of 2001, and I think a case can be made for it to surpass the average performance of 2.9 times initial weekend for four weeks of earnings. This type of performance would not be unprecedented; the three Lethal Weapon sequels, this series' closest analog, all outperformed this mark, Lethal Weapon 2 by a very wide margin. With this in mind, I will let my initial bet ride and add another £35 to this at the new buy price of $184 million.

Planet of the Apes had a less-than-leggy performance over the weekend, somewhat to my dismay. The 60% drop from its record-breaking opening leaves very little recovery room as far as exceeding expectations. For this reason, I sold off my four-week bets earlier in the week, when the spread was at $176-181 million. My initial bet on this position was obviously more profitable than the second bet I made, which was profitable, but only barely. The sum of these two bets gives me a gross of £115. Some of this money will go towards reversing this position and buying a £25 bet at the sell position of $172 million.

A miscalculation I made last week was to underestimate the potential growth in the American Pie 2 spread. It jumped significantly after Rush Hour 2's excellent weekend, from $32-34 to $43-45 million. I've also changed my mind about its potential for the weekend, as TV spots have started to appear with more frequency and have been quite funny. Subtle attempts are also being made to sell to an older audience, something that will be necessary to give it Scary Movie-like success. I will lay £25 down on the long position, in reality hoping for only a three- to five-point jump. I will also lay down £25 on its four-week total, with the spread currently sitting at $120-125 million.

The new available bet this week is on Captain Corelli's Mandolin. I had expected this to be the first movie I would be taking a short position on over the weekend, but I must give credit to Cantor for setting a more accurate spread than I would have expected. At $10-12 million, this spread sits at about my expectations for the film. Without Nicolas Cage's presence, this would likely be a very limited release film, and the trailer has received very middling response. However, I still feel there is a greater chance of it opening in double rather than single digits, and I will place a £25 bet on the long position. I am only watching the four-week total spread at this moment.

Until next week...

Betting History
Date
Film
Bet Type
Amount
Position
Spread at Bet
Current Spread
Notes
7/25/01Planet of the ApesFour week£5Long$155-160 million$172-177 millionSold on 8/6/01 at $176. Cash-out of £85.
8/1/01Planet of the ApesFour Week£10Long$169-174 million$172-177 millionSold on 8/6/01 at $176. Cash-out of £30.
8/1/01Rush Hour 2Weekend£20Long$40-42 million$67.5 million25.5 point profit at settlement. Cash-out of £530.
8/1/01Rush Hour 2Four Week£15Long$107-112 million$179-184 million--
8/8/01Planet of the ApesFour Week£25Short$172-177 million$172-177 million--
8/8/01Rush Hour 2Four Week£35Long$179-184 million$179-184 million--
8/8/01American Pie 2Weekend£25Long$43-45 million$43-45 million--
8/8/01American Pie 2Four Week£25Long$120-125 million$120-125 million--
8/8/01Captain Corelli's MandolinWeekend£25Long$10-12 million$10-12 million--

Assets and Bets
Initial stake: £500
Cash on Hand: £1170
Amount in Bets: £150
Unrealized Profits and Losses: £1005


The information in this article is for entertainment purposes only and does not constitute any form of advice or recommendation in making any specific investment or betting decisions. Nothing in this article is intended to encourage or facilitate any activity that is prohibited by the laws of any governmental authority.


     


 
 

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