This high-profile tech stock has been struggling with resistance for the last couple of days and looks ready to reverse lower.
NEW DIRECTIONAL PUT PLAYS
Research In Motion - RIMM - close: 57.78 change: -1.02
Stop Loss: 60.25
Target(s): 55.05, 53.00
Current Option Gain/Loss: +0.00%
Time Frame: 1 to 2 weeks
New Positions: Yes
Research In Motion (RIM), a global leader in wireless innovation, revolutionized the mobile industry with the introduction of the BlackBerryÂ® solution in 1999. Today, BlackBerry products and services are used by millions of customers around the world to stay connected to the people and content that matter most throughout their day. Founded in 1984 and based in Waterloo, Ontario, RIM operates offices in North America, Europe, Asia Pacific and Latin America. RIM is listed on the NASDAQ Stock Market and the Toronto Stock Exchange. (source: company press release or website)
Why We Like It:
There are plenty of opinions about RIMM. The stock sank from April through August on worries that RIMM's core Blackberry smartphone was losing share to Apple's iPhone and Google's Android. According to sales figures the iPhone and Android seem to be outselling Blackberry but RIMM says it's core business is still strong. Now the company is trying to compete with Apple in the tablet space with RIMM selling their "Galaxy Tab" versus AAPL's iPad.
I would actually consider bullish positions in RIMM if the stock would correct down toward the $51-50 zone, which should be support. Yet on a short-term basis RIMM's rally is failing. The $60.00 level is resistance that is bolstered by the simple 200-dma. The rally on Thursday last week stalled at $60.00. Friday's intraday strength reversed and RIMM produced a failed rally pattern. Today's failed rally at $60.00 this morning reaffirms the resistance level. I suspect RIMM is poised to correct toward $55 or lower. I'm suggesting we buy puts right now with a stop loss at $60.25. Our first target is $55.05. Our second target is $53.00. Then we'll start looking for a bullish entry point.
Suggested Position: Buy the December $55 puts (RIMM1018X55) current ask $2.36
Entry on November 16th at $ xx.xx
Earnings Date 12/16/10
Average Daily Volume = 17.6 million
Listed on November 15th, 2010