Lurker Posted June 16, 2010 Posted June 16, 2010 It's a stupid hedging tool, considering you can already hedge the companies directly. I don't know how it'd work either. Maybe some ex-AIG guys are working with the counterparties...
Guffalo Posted June 17, 2010 Posted June 17, 2010 Maybe 3 people on this board know this about me, but I have worked in the futures industry for 28 years, from Compliance, to IT to product development and clearing. Over the course of my career there has been several attempts to launch this contract. For the life of me, I cannot figure out how they plan on setting a starting value for each strip, I haven't read the specs yet, but how would they set a value on something like Avatar vs. Blair witch project ? Do they look at gross opening weekend, or cost vs. opening receipts? Certain movies have a boatload of advertising, while others have very little. The only hedge I can see is the studios and the stars who can hedge against their opening weekend. I have spent most of my years in the softs (actual products like corn/sugar/coffee) where time, weather, disease, transportation costs, and storage charges factor into the value of an underlying contract. With movie openings I see very little indication that the factors surrounding a movie are anything more than man-made advertising or hype. This just seems ripe for manipulation. This one has me shaking my head and I have seen some very bizarre contract launches in the past.
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