Research in Motion (RIMM) 11/6/09 PriceWatch Alert Bearish Price Movement

Posted: Friday, November 06, 2009 8:43 AM EDT
By: Market Intelligence Center Staff

Research in Motion (NasdaqNM: RIMM) closed yesterday at $57.79. So far the stock has hit a 52-week low of $35.05 and 52-week high of $88.08. Research in Motion stock has been showing support around 55.86 and resistance in the 60.46 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 Mar '10 60 covered call (RFY CL) for a net debit in the $51.54 area. That is also the break even stock price for this trade. This covered call has a 134 day duration, provides 10.82% downside protection and a 16.41% assigned return rate for a 44.71% 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 '11 30 Call (OHR AF) and selling the Mar '10 60 call (RFY CL) for a $23.90 debit. The trade has a 134 day life and would provide 6.73% downside protection and a 25.52% assigned return rate for a 70.00% annualized return rate (for comparison purposes only). Research in Motion does not pay dividends at this time. [FBB-Seven Summits Research]