Movie theatres are nostalgic. I firmly believe that many investors want a traditional big screen sector to flourish out of self-interest. Going to see a Blockbuster in theatres and relaxing for a couple hours with popcorn brings back childhood memories, after all.
Canadian theatre chain Cineplex Inc. (TSX:CGX) has seen revenues decline approximately 95% this past quarter, amid massive COVID-related shutdowns across the country. Some theatres have started to reopen in key markets, such as Ontario. However, we are a long way from seeing long-term, full-scale seating capacities from here on out. Social distancing rules are likely to be reinforced for a lot longer than Cineplex investors were initially hoping.
That being said, I think Cineplex investors and those bullish on Cineplex generally will look for any positives in next quarter’s earnings report. Even if the company needs to sell strategic assets to keep the lights on, Cineplex bulls will continue to beat their drums hard. This provides a potential trading opportunity around the company’s next earnings report.
I suggest investors consider looking at call options that expire in approximately three months to take advantage of sentiment which may swing wildly positive but is generally very bearish right now.
This is a profitable way to play Cineplex even if you’re in the bearish camp, like myself, with respect to Cineplex’s future prospects.
Invest wisely, my friends.
