Research in Motion Earnings Trade Ideas
- Posted by Greg Harmon
- on September 27th, 2012
This is the trade that started it all last year. A bearish 34/26 Risk Reversal, put on for 15 cents that returned 3.05 overnight. You can read the details here when you have time.
Research in Motion, $RIMM
Research in Motion, $RIMM, has been left for dead since at least April of last year. There has been talk of a buy out that occasionally pops it but nothing interesting until this past week. New Subscribers? Hmmm. The chart shows a possibility of a bottom being made as it consolidated between about 6.35 and 7.75. With a Relative Strength Index (RSI) that is trending higher near the mid line and a Moving Average Convergence Divergence (MACD) indicator that is toying with a cross to positive. The momentum is higher. Under 6.20 look for a Measured Move to near zero. Resistance higher comes at 8.20-8.40 and then there is a gap up to 8.87. The reaction to the last 6 earnings reports has been a move of about 16.9% on average or $1.10 making for an expected range of 6 to 8.10. The at-the money weekly Straddles suggest a roughly $0.80 move by tomorrow with Implied Volatility at 240% above the historical at 53% and the October at 100%. I just took trade #3 for 2c
Trade Idea 1: Buy the September 7 Call for $.44.
Trade Idea 2: Buy the September 7.5/8 Call Spread for $.12.
Trade Idea 3: Buy the September 6/8 bullish Risk Reversal for 1 cent.
Trade Idea 4: Buy the October5 weekly 6/8 bullish Risk Reversal for 2 cents.
Trade Idea 5: Sell the September 7 Straddle to buy the October 7 Straddle for $0.54.
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Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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