How 'Star Wars' Could Send These 3 Stocks to the Moon

Hasbro, Inc. (NASDAQ:HAS), Electronic Arts Inc. (NASDAQ:EA), and AMC Entertainment Holdings Inc (NYSE:AMC) are poised to benefit from a big "Star Wars" debut

by Alex Eppstein

Published on Dec 16, 2015 at 2:52 PM
Updated on Jun 24, 2020 at 10:16 AM

With the national release of Walt Disney Co's (NYSE:DIS) latest "Star Wars" installment just around the corner, there is no shortage of hype. Already, reviews are dubbing the movie "a spectacular homecoming" and a "rollicking adventure" -- though not everyone has drunk the Kool-Aid. While the film is aiming to have an impact on viewers, it could also affect a number of stocks, including Hasbro, Inc. (NASDAQ:HAS), Electronic Arts Inc. (NASDAQ:EA), and AMC Entertainment Holdings Inc (NYSE:AMC).

HAS manufactures "Star Wars" toys, and a box office blockbuster could help sales dramatically. Ahead of Friday's premiere, though -- and in the wake of a less-than-flattering segment from CNBC's Jim Cramer -- the shares have edged 0.5% lower to sit at $68.82, though they remain up over 25% on the year.

Expectations are low on HAS at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). During the past two weeks, traders have bought to open 1.58 puts for each call -- a ratio that ranks in the 84th percentile of its annual range.

Likewise, the stock's Schaeffer's put/call open interest ratio (SOIR) sits at a 12-month peak of 4.13, indicating puts quadruple calls among options with a shelf-life of three months or less. If Hasbro, Inc. resumes its long-term uptrend and bounces off support in the $65 region, an unwinding of this negativity could send it to the moon.

Meanwhile, EA is getting hit hard today, even though the company produces the popular "Star Wars Battlefront" video game, which it estimated will move 13 million units in the fiscal year ending March 2016. At last check, the shares are off 1.7% at $71.07, but they're still 51% higher on the year. Earlier, in fact, MKM Partners named EA a "Top Stock Pick for 2016."

Adding to a potential bullish case is the negativity surrounding Electronic Arts Inc. across the ISE, CBOE, and PHLX. The stock's 50-day put/call volume ratio of 0.69 sits near the top quartile of its annual range, and its SOIR of 1.36 rests below just 18% of comparable readings from the past year. From a contrarian perspective, EA could get a boost should these bears begin to hit the exits.

Finally, AMC is up 5.4% at $25.42, with ticket sales brisk at the nation's second-biggest theater operator, which just purchased Starplex Cinemas. "Everyone is expecting that 'Star Wars' is going to be a blockbuster with huge revenues on opening night and opening weekend, but I think there's the potential to do more," said newly named CEO Adam Aron. Longer term, however, the shares are down about 3% in 2015.

Option traders have been betting against AMC Entertainment Holdings Inc, according to data from the ISE, CBOE, and PHLX. Specifically, the stock's 50-day put/call volume ratio checks in at 1.21 -- or higher than three-quarters of all other readings from the past year. If Friday's premiere surpasses expectations, though, these bears could be forced to throw in the towel -- potentially lifting the shares.

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