Rumors Spur Run On Research In Motion Weeklies
by Option Review - September 27th, 2011 2:34 pm
Today’s tickers: RIMM, POT, AXP & HSC
RIMM - Research in Motion Ltd. – Speculation that activist investor Carl Icahn may have approached and taken a stake in beleaguered BlackBerry maker, Research in Motion Ltd., sent shares in the Canadian company up as much as 7.4% to an earlier high of $23.29. The hum of the rumor mill spurred a pile-up in weekly call options on the stock, as traders scrambled to get long the short-dated contracts in the event that the rumors have legs. Speculative plays are heaviest in the Sept. $23 strike call, where more than 14,100 contracts changed hands against previously existing open interest of 2,610 positions. Most of the calls were purchased for an average premium of $0.42 a-pop, thus preparing longs to profit should RIMM’s shares exceed the average breakeven price of $23.42 at expiration this week. Investors exchanged more than 7,100 calls at the higher Sept. $24 strike today, and appear to have purchased a little more than half of the contracts at an average premium of $0.30 a-pop. Traders long the calls may benefit from continued gains in implied volatility and the price of the underlying shares. Clarity on the rumors from Icahn himself may see the stock continue to climb, or could burst call buyers’ bubble and send shares back down. Lack of clarity could potentially work in favor of long options positions should speculation continue to lift volatility.
POT - Potash Corp. of Saskatchewan, Inc. – Bullish positioning in options that expire at the end of the trading week popped on Potash Corp. this morning, as shares in the producer of fertilizer and feed products rallied 5.75% to $50.05 by 11:05 am EDT. Shares in the Canadian potash producer joined in on today’s relief rally in global equities, and were raised to ‘Overweight’ from ‘Neutral’ with a 12-month target share price of $60.00 at Atlantic Equities today. Short-term bets on continued strength in Potash Corp.’s shares through the end of the month pushed volume in Sept. ’30…
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Frightening Friday – Halloween Edition!
by phil - October 30th, 2009 8:30 am
Wheee what a day!
Who said we placed a spread bet on the Dow moving 200 points one way or another in yesterday's morning post? Me, that's who. And how much did the Dow move yesterday? 199.89 points. OK, so I was wrong by .11 but our plays worked out just fine and we flipped bearish again as we flew up and we'll see if my streak continues this week. We would have gone more aggressivley bearish but we were worried about end of the month (and end of the year for many hedge funds) window dressing that would keep things going for one more day.
Everything went according to plan and we got the bounces we were looking for but the RUT failed to retake 589, which was our canary in the coal mine's breakdown level from last week. As I alerted members at 12:15, that and the Qs failing to hold 42 into the close, which failed to confirm the Nas move over our 2,088 watch level. We have our DIA puts, we have our SRS longs, we have our DXD longs (which are half price as our DDMs paid off yesterday) and we shorted SPG into the close as Cap noted they had a ridiculous run-up ahead of today's earnings.
As I said to members in the afternoon, my gut said to go more bearish but we allowed ourselves to be spooked by Mr Stick in the afternoon and ended up about 55% bearish with a 1/2 cover of our long DIA puts but we already made a quick 20% on the sale of short puts in the morning so it's a position we had a little slack in going into the close. Our logic is, even if we have another up day today, we're still going to want some pretty serious coverage into the weekend unless the Russell and the Qs can confirm this move up today.
Bulls should be spooked by the fact that a blow-out GDP report, showing an economy with a HUGE turnaround and the President crowing on TV about how great things are going could ONLY erase 1/2 the losses we suffered since last week. Another market move I hit on the head yesterday was my prediction that, after 3 consecutive 1.8% down days in a row, the Hang Seng would jump…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the site