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.

Is RIMM a Pin?

By

With volume ballooning, stock definitely remains one to watch.

PrintPRINT
There's a perpetual urge to declare any stock near strike a "pin."

With Research in Motion (RIMM) near 40, is it a good candidate?



Remember: There are certain characteristics that make something more likely to pin than not. In no particular order, we have the volatility of the name in question, the overall market volatility, the trend in both volatilities, the open interest on the line in question relative to typical volume in the name, and the degree to which that open interest is recent and held by likely delta hedgers (market makers and specialists).

In English, in order to expect RIMM to pin, we'd like a relatively non-volatile market, a relatively non-volatile RIMM with high open interest relative to daily volume, and a trading crowd to own that open interest - preferably calls, and preferably bought in bulk this week.

Are these factors in place? Maybe.

Volatility had tapered off a bit recently in both RIMM and the market. That suggests yes. Open interest is okay: It's 25,000 calls and 23,000 puts vs. about 15-20 million shares per day.

As the graph below shows, volume was fairly unexceptional in RIMM options all week. All month, really - until Wednesday, when it ballooned, particularly on the March 40 line.

So I'm going to call this one to watch. I'm not sold on this expiration being a great pin bonanza, as the bulls have certainly squeezed the call shorts the last couple weeks.

But RIMM looks as likely as anything to be one.

< Previous
  • 1
Next >
No positions in stocks mentioned.
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