Research in Motion (RIMM, $43.22, down $1.42) is down another 3% today and its chart looks like a train wreck waiting to happen. The stock fell hard last week, tumbling from $57 to $49 after lowering guidance and has been in a downtrend since. You could have made a sweet amount of money had you bought put options on RIMM even after the news.

I pulled up RIMM’s chart and by the looks of things, the stock could be headed back into the $30’s. The breakdown in the stock has put it below its 10 and 20-day moving averages and the next level it appears likely to test is its 50-day. The downgrades have been fast and furious for the stock and option traders are loading up on the March puts.

A couple of put options worth considering are the March 40 puts (RUPOH, $2.15, up $0.40) and the March 35 puts (RUPOG, $0.85, up $0.20). Don’t mess with the February options, they expire this Friday…

Side Note: Federal Reserve Chairman Ben Bernanke just finished speaking and the Dow was positive before he spoke. The Dow is now down 2 points to 7,550. Looks like my theory from the Weekly Wrap proved correct when I said it seems the market always heads lower whenever this dude speaks.

Rick Rouse
Rick@OptionsMentoring.com