The market took Research in Motion (RIMM, $96.20, down $2.07) below $100 yesterday as the stock fell over $7 and is continuing lower this morning. The stock hit $110 earlier last Friday and we closed the October 120 calls (RULJD, $2.36, down $0.41) at $5.50. Two call options were purchased for every one put option. The entry price on the calls was $3.22 each.

We booked a 35%-40% profit on the call options and we still had the October 80 puts (RFYVP, $3.30, up $0.57) to play with. Our entry price for the put option was $1.82. You can sell them now or place a stop of $3.00 on them. A stop of $3.00 gets you a little over a 50% gain.

Our entry price was $8.26 ($3.22 x 2 + $1.82) for the two calls and one put. Since we sold the calls at $11.00 ($5.50 x 2) and are getting at least $3.00 for the puts that puts our exit at $14.00 for the entire trade. Quick math gives me a 75% return.

The trade was another example on how to use strangle options in your portfolio. They have been working well in the current market environment but remember they are only good for stocks that make huge moves.

Rick Rouse