RIMM earnings straddle/strangle?

Discussion in 'Options' started by forex-forex, Dec 18, 2007.


    Possible earnings play on RIMM this December 20 with the December options which expire the next day. Looks like an ATM straddle/strangle will cost about $11.00 a 11% move is need just to break even, anything above that is profit.

    I'm leaning towards long 1 strike OTM calls instead though.
  2. RIMM has some "weird" strike prices. Probably a result of a stock split. Anyway, why not collect some "juice" and short-sell the Dec-Par-Straddle or the Dec-(96 & 5/8)(103 & 3/8) strangle instead?
  3. vahn


    Dec RIMM Option IV is about 140%. How about the risk of IV crush in the expiry day?
  4. They had a 1 for 3 stock split a short time ago. I definitely don't want to be selling anything for credit based on how RIMM can explode after earnings.

    A 11% move or more will take care of that.
  5. jazzsax


    Like in June.... i took a nice 600% profit overnight!
  6. xyannix


    The problem with december call is, you need to pick the correct strike.

    If it goes to 108 on friday morning there is little chance the 110 call will still be worth $2 after 10:00am.

    Then again if it goes to $180 we can all get new cars :)

    You may want to do a vertical spread. Buy the 105 and sell the 110. $1.65 Debit for a possible $3.35 profit.
  7. So whats the thought on the 100/110 Dec strangle? Looks like it'd be $5.75 debit. A 4% move up or 6% down from $106 would be in the money.
  8. Plus an additional 5% to break even.

    I just sold the Dec 105 Call @ $5.20 which I bought yesterday @ $3.50, I decided not to hold through earnings. Tomorrow I will know if I sold too early or sold at a good time.
  9. RIMM is at $120.00, might gain a bit tomorrow also. Could close in the $130 range.