Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Large Move in Store for Research in Motion

By

A dip in volatility certainly seems likely.

PrintPRINT

Fourth quarter earnings season either starts tomorrow after the bell -- as Research in Motion (RIMM) releases -- or if you like looking backwards, third quarter earnings season ends tomorrow. But whether you're an optimist or pessimist, the company still reports.

I took a quick glance and saw 60 volatility or so in the near month's and prices that don't really look all that cosmic in dollar terms. The Oct. 80-95 strangle is about $5.00 with the stock near $86. High, not huge when you consider this pup can occasionally fly on earnings.

But then you look at the volatility charts it does seem wildly overpriced. 10-Day HV sits near 20, but even if you consider that just the low end of the typical range, the best you can say is it's about 30. Or at least has been around there for the past few month's.





Now, I don't expect options to dip to 30 volatility after the news, but 40 certainly seems likely. So RIMM is pricing in a pretty large earnings move, something along the lines of 10% or so, as of today.

There's about a 100% chance RIMM stomps the estimates, so the question you have to ask is: to what extent is that in the stock already?

< Previous
  • 1
Next >
Position in RIMM
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE