I've been warming the bus up for Imax (IMAX, $7.76, up $0.40) and Friday Wall Street finally jumped on board. The stock had a huge day, up 5%, with the release of The Dark Knight as strong ticket sales propelled the stock to a new 52-week high of $8.28 earlier in the session.
Just how strong were ticket sales? Strong enough to break box-office records. The Dark Knight destroyed the weekend record set by "Spider-Man 3" last year, selling an estimated $155.3 million worth of tickets during its first three days of release. Spidey did $151 million. Imax has nearly 100 venues and quite a few of them were sold out before the weekend even started. I don't have any numbers on what Imax made but they should announce something on Monday.
Imax's stock experienced heavy volume on Friday as 1.5 million shares changed hands or more than 7x average daily volume. The September 7.50 calls (IMQIU, $1.00, up $0.35) which were going for 75 cents in my original write-up back in March had a monster day, rising 54%. The call options did hit a high of $1.20 on Friday and I'm hoping they continue higher this week.
I was pretty bullish on the company back then and I still am. When we put this trade together, I was predicting Imax could be sitting at new 52-week highs by the time summer gets here. I only mention this because it is important to stick to your trading plan and so far everything has worked out as planned. When the calls traded up to $1.20 it would have been okay to close out at least half of the position and set stops on the rest of your position at $0.75.
The Setember calls still have plenty of time left before they expire but for those of you looking at longer-term plays there aren't many available. Unfortunately, Imax does not have any LEAP options listed as the furthest out we can go would be the December contracts. The December 7.50 calls (IMQLU, $1.30, up $0.35) and the December 10 calls (IMQLB, $0.50, up $0.20) were active as both had pretty decent volume.
Rick Rouse
Rick@OptionsMentoring.com
