I recently wrote about the Cantor Exchange, which allows the trading of Domestic Box Office Receipt Futures of current and upcoming movies. I decided to give the practice account a try. The practice account has a reward program called It Pays to Practice, and will continue until December 31. You can convert your practice trading profits to cash without any risk.
I bought 10 contracts on the upcoming Sherlock Holmes movie, which will be in theaters on December 25, paying $161 per contract. This means that I believe that the total box office receipts will exceed $161 million by January 20, 2010. The movie, distributed by Warner Brothers (TWX), stars Robert Downey Jr., Jude Law, Rachel McAdams, Mark Strong, and Eddie Marsan. The contract is now at $170 (remember, this is fantasy money right now), an increase of 5.5%.
Even current movies that have already been released can be traded, such as Disney's (DIS) A Christmas Carol, starring Jim Carrey, Gary Oldman, Bob Hoskins, Colin Firth, and Robin Wright Penn.
You can also short movies, if you believe that the box won't reach the anticipated level. For example, I shorted 10 contracts of Old Dogs starring John Travolta, Robin Williams, Kelly Preston, Ella Blue Travolta, and Lori Loughlin. The price went off at $65 per contract, which is a total box office receipt of $65 million. After seeing that the Yahoo (YHOO) critics ratings averaged a 'D', and many reviewers panned the movie, I decided to do the short. I closed out the short position at 57.25, a profit of $7.75 per contract, or 11.9% in six days.
One of the best features about the exchange is that it is open 24 hours a day. If you think you know what movies will be The Bomb and which will bomb, then maybe you should give the Cantor Exchange a try.
Author owns TWX, DIS, and YHOO. Also holds practice positions in SHOLM and CAROL.
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