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– Stephen Prior

On Wednesday morning, IMAX stock was going down.

But I couldn’t buy a movie ticket.

I’d tried the day before. Every IMAX screening of The Odyssey near me was sold out, with no good seat available until the following week. Meanwhile the stock I’d recommended to you two days earlier was in the red.

Back Up to Last Monday

Last week I wrote to you about IMAX and asked whether Christopher Nolan’s The Odyssey could be the trigger catalyst the stock had been waiting for.

The box office numbers were staggering, starting with a $264.1 million worldwide debut that gave Nolan the biggest global opening of his career. But the number I kept coming back to was that premium large formats accounted for 53% of domestic revenue.

Over half the tickets sold were on an IMAX screen.

I told you I thought shares could rally back toward the recent highs around $45. Inside The War Room, our members bought the August 21 $40 calls.

Then The Ship Went Down

Two days in and the position was underwater, which is usually where people get shaken out of a good idea.

Here’s what I told our members that Wednesday morning:

I continue to think that the market is not realizing the fact that every IMAX theater showing The Odyssey is sold out. I tried to get tickets yesterday, and there’s not a good seat available until next week.

I couldn’t buy a ticket to the movie, and the market was selling the company that owned the screens. So, we added to the position and lowered our cost basis to around $2.45.

Thursday Morning Homecoming

IMAX reported second-quarter earnings and beat on everything.

Revenue came in at $102.8 million, up 12.2% year over year, beating a Wall Street estimate of $94.5 million. Adjusted earnings hit $0.43 per share versus a consensus of $0.27, which is a 59% beat, while operating margin expanded to 20.2% from 15.6% and free cash flow came in at $36.8 million.

The Odyssey alone delivered $52 million in IMAX box office, roughly 20% of the film’s entire worldwide debut.

The stock jumped nearly 12% and traded above $45. We sold for a 67.7% gain, and the members who added on Wednesday’s dip did even better.

Siren Songs in the Chat

Joe S. got in late at $2.03, averaged out at $4.12, and booked 103%.

Mr. B was in at $1.90 and out at $5.10.

Rick R. went in at $3.05 and out at $5.10 across five contracts.

Pete678 closed eight contracts for a 79% net gain and then held one back on purpose to see what earnings would do to it. He closed that last contract the next morning for 205.8%.

MichaelJay put it best: “+85% winner – can afford to get popcorn at the movies now!”

Why We Rang the Register Instead of Riding the Wave

The broader tape turned negative that very morning. I played it cautious… because protecting profits comes first.

Taking winners as they come felt like the right tactical move, at least until this tech-based bearishness burns off.

Every trader wants to hear the Sirens sing about how much higher a winner could run. But the ones who cash out are the ones who tied themselves to a rule before they ever heard the song.

Your Action Plan

Last Monday’s letter gave you the idea…

What it couldn’t give you was Wednesday.

The alert explaining why a losing position was the best entry of the week only went out in real time, to the room, while the stock was still red. That’s the difference between reading about a trade and being in one.

Ithaca wasn’t the reward for a smooth trip. It was the reward for not abandoning the ship.