12:10 pm (EST)
Research In Motion (RIMM, $59.10, up $10.01) is stealing the show today as the stock is up 20% after reporting better-than-expected earnings. The stock opened at $59.76 and hit a high of $60.95. In pre-market trading, the stock was above $63. Still, today’s big move in the stock was an huge homerun for the April 60 calls (RFYDL, $2.82, up $2.16) which are up over 300%.
The calls have traded as high as $3.90 and congrats to many of you who did well with this one. I mentioned them Wednesday night when they closed at 22 cents and volume was heavy. Thursday morning I also said they might be pretty active and they opened at 34 cents and closed at 66 cents. From 66 cents to $3.90 is amazing and even at current levels, it’s jaw-dropping. If you haven’t closed out, do so now but you could keep a couple contracts open if you bought 10 or more. A lot of people are calling for RIMM to reach $70…
I also favored the April 50 calls (RFYDJ, $9.50, up $6.25) and the April 40 puts (RUPPH, $0.04, down $0.582) as a strangle trade. In the Weekly Wrap the cost to put the trade on was $3.20 ($320) and by Wednesday it would have cost you $2.85 ($285). As you can see the put options are nearly at zero because the stock is 20 points away from being in-the-money. However, the call options are at $10 which is well over a 200% return for today and was a pretty “safe” trade.
Close out the call side of the strangle trade but leave the put options open anyway. It is okay if they expire worthless because you are the owner of the puts. You may get 4 cents for them but the bid is probably zero and it saves any commission you might have to pay. If by some miracle the stock falls below $40 by April 17th, they would be in-the-money.
Dendreon (DNDN, $5.14, up $0.80) is making some noise right now..I don’t see any news but I gotta go do some research! I’ll be back Sunday night with the Weekly Wrap. To sign-up, put you email address in the box up on the right of you. Have a good weekend and send me your emails with any questions or comments.