Research in Motion (RIMM) PriceWatch Alert Shows Bearish Technicals

Posted on Monday, September 08, 2008 8:07 AM

Research in Motion (NasdaqNM: RIMM) ended the last trading session at $106.95. So far the stock has hit a 52-week low of $80.14 and 52-week high of $148.13. Research in Motion stock has been showing support around 98.81 and resistance in the 113.07 range. Technical indicators for the stock are Bearish and S&P gives RIMM a neutral 3 STAR (out of 5) hold rating. RIMM appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Dec '08 115 covered call (RUL LU) for a net debit in the $96.60 area. That is also the break even stock price for this trade. This covered call has a 103 day duration, provides 9.68% downside protection and a 19.05% assigned return rate for a 67.50% annualized return rate (comparison purposes only). A lower cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the RIMM Jan '10 45 Call (YKD AI) and selling the Dec '08 115 call (RUL LU) for a $55.65 debit. The trade has a 103 day life and would provide 5.89% downside protection and a 25.79% assigned return rate for a 91.00% annualized return rate (for comparison purposes only). Research in Motion does not pay dividends at this time. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]