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Feast or Famine for Research in Motion?


The board anticipates a 10% move right now.

Lots of buzz about Research in Motion (RIMM) earnings this go around, at least judging by the anecdotal tell of me getting a few emails to give it a look.

So let's dig in.

Research in Motion makes something you may have heard of called a "smartphone." I predict in the future, only the four richest kings in the world will be able to afford one. I personally use an iPhone (AAPL), mainly because I won one a few years ago and so help me, I'm so used to the interface I literally can't type on a BlackBerry keypad. So don't hold your breath for my wildly coveted endorsement.

Research in Motion generally prices in about an 8-10% move. It's a day early to know for sure, but it looks like the lower end of the range right now if you watch the Decembers. But here's the oddity: January options could really get clocked here. Ten-Day HV has crept up from 20 to 40 this month, but that's probably high end. January options trade high 50s volatility now, but could easily settle back in the mid to low 40s -- and that's a rather large move given they have a full cycle to expiration.

So throw it all together and I'd say the board anticipates a 10% move right now. Research in Motion tends toward the feast or famine. We've seen it do nothing and we've seen it get rocked, like last cycle's pounding. In fact, that pounding is exactly why the Januarys are holding strong here.

I'm probably going to wait another day, but I'm inclined to fade the fear of a rerun of last cycle and sell some gamma here.

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No positions in stocks mentioned.
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