Wednesday, April 11, 2007

Long Straddle on RIMM

Today is RIMM's earnings, and the market seems to have bullish bias, as it penetrated and stayed above the 52 week high at 148.95 and the call/put ratio was much heavier on the call side.
Earnings plays are very risky, but can pay off well. We did a long straddle, which is purchasing a call and a put at the same strike price, with the same expiration date (145 and April 2007 in this case).

STOCK: RIMM
STRATEGY: Long Straddle
OPTIONS: RFY DI 145 April Call (5.90)
RFY PI 145 April Put (4.50)

4/12/07 UPDATE:

We closed the 145 April Put leg at 9.40 for a nice profit of 4.90! But overall, the stock did not move as much as we hoped to either the upside or the downside. Earnings were short, but not drastically so, and the market did not come down too hard on it.
For now, we are keeping the other leg in the market, as if we close the entire trade, then we will be at a loss. Will update once the entire trade closes.

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