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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Dragonfly Capital Views Performance Through September 2012 Expiry

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