We’ve been talking about Research In Motion (RIMM, $49.28, up $3.66) all week and wouldn’t you know it…the stock actually did jump 20%! We knew 10% was a given up or down and I was guessing maybe 15%, and yes, I suggested taking the safe money along with the 100% return, and yes, I said the stock could head lower…but I sure hope some of you went against the grain and left a half a position open on the the April 60 calls (RFYDL, $0.66, up $0.44).

At 7:10pm (EST), the stock is up $11.05 to $60.14, or 23%, in after-hours trading. The April 60 calls are going to explode in the morning if these gains hold up. I’m going to get technical on you for a minute but I’m going to show you how to figure out where the option could open up in the morning.

The option currently has a “delta” of 0.1 which means for every dollar that the stock goes up, the option would move up 10 cents. This means that if the stock is up $10 in after-hours trading, then the April 60 option should gain a $1.00 right off the bat if the gains hold when the market opens at 9:30am.

So, if you bought 10 contracts at 60 cents before the market closed, then you should show a $1,000 profit as the option would be valued at $1.60. I got that by adding the closing price of the option (60 cents) by adding the $1 from the “delta” and the additional $10 move in the stock. From 60 cents to $1.60 is a 167% return.

Here is where it gets really, really interesting though. At-the-money calls usually carry a delta of .50-.60 and since the stock is at $60 and the option’s strike price is at $60, any gains the stock makes over $60 will be gravy. So if RIMM hits $61, the April 60’s should be at $2.10 which gives you a 250% return. At $62, the options should be at $2.60 which would be a 333% return. Wow…

These are rough estimates but they should give you a guide to where the options may open at. All of the “Delta” stuff is explained in the trading manual which should be ready in May. If you would like to be put on the list to get the first printing, send me an email. We are giving special discounts to the people who signup. If you already have signed up, we have you on the list, so you are covered. Some of the lingo in options scare people off but that is why I am here, right?

Good luck to those of you who held the trade or a partial. The straddle trade is going to be a monster, too, if you left it open or only closed half. See you in the AM!

Rick Rouse