2 Movie Stocks Soaring Today
The shares of India-based movie company Eros International (NYSE:EROS) are higher today, thanks to a new high-profile investor just ahead of earnings. Meanwhile, shares of American movie theater titan IMAX Corp (NYSE:IMAX) are rallying thanks to a huge box-office debut for "Black Panther" and a big weekend in China. What's more, both EROS and IMAX stocks could enjoy a short squeeze.
Ample Fuel for an EROS Short Squeeze
Eros International stock was last seen 10.6% higher at $14.05 -- set for its highest close since October -- after Reliance Industries announced a 5% stake in the film firm. The stock has advanced more than 50% since its December low of $9.20, ushered higher atop its 10-day moving average. What's more, EROS stock is now trading above a former speed bump in the $13-$13.50 neighborhood, which contained its upside momentum in the fourth quarter of 2017.
Roughly one-third of EROS' float is dedicated to short interest, representing a whopping 41 days worth of pent-up buying demand, at the security's average pace of trading. As such, a short squeeze could propel the shares even higher on the charts -- especially if Eros International reports stronger-than-expected earnings tomorrow.
However, some of those shorts may have been hedging their bearish positions with EROS call options recently. During the past 10 days on the major options exchanges, more than 3,800 calls were bought to open, compared to fewer than 20 puts. The resulting 10-day call/put volume ratio on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) of 292.46 is in the 95th percentile of its annual range, underscoring a healthier-than-usual appetite for long calls over puts in the past 10 sessions.
'Black Panther' Boosts IMAX Shares
IMAX stock was last seen 3.1% higher to trade at $23.30, after "Black Panther" shattered records and expectations with a $242 million holiday weekend opening. The film -- from Walt Disney's (DIS) Marvel unit -- recorded the highest-ever domestic gross for a Monday, and the second-highest four-day U.S. opening of all time, behind only "Star Wars: The Force Awakens." For IMAX, specifically, the movie raked in a four-day total of $35 million globally.
In addition, IMAX China said it saw a record-breaking four-day performance over the Chinese New Year, grossing $18 million in the period starting Feb. 16, thanks to the release of "Detective China Town 2," "Monster Hunt 2," and "Operation Red Sea." The solid performance calls into question recent analyst opinions of an oversaturated Chinese market.
The shares ended lastweek atoptheir 40-week moving average for only the second time since April, and are now slightly higher year-to-date.This trendline acted as support for IMAX stock in the first quarter of 2017.
As with EROS, IMAX could also enjoy a short-covering rally. Short interest represents 11.4% of the equity's total available float, and would take more than six sessions to buy back, at the stock's average volume.
Again, though, some of those shorts may have been picking up options insurance in the form of calls. More than 4,500 IMAX calls were purchased on the major exchanges in the past two weeks, compared to fewer than 150 puts. The 10-day ISE/CBOE/PHLX call/put volume ratio of 35.77 is in the 96th percentile of its annual range, pointing to accelerated call buying over put buying lately.