DaytradeTeam Brainzzzz
Trading Tips and Strategies from Traders at DaytradeTeam
Monday, November 21, 2005
"Extreme Potential" OptionsTrading Alert on RIMM Pending
RIMM has been in the news a lot lately, with its patent lawsuit dominating the headlines. Volatility has been huge over the last few weeks-- and I have a feeling the party has just begun.
When looking at the one year chart of stock trading on RIMM, the first thing I notice is a head and shoulders reversal pattern that has just been confirmed with Monday's close near $67.50. The other thing I notice is the relative weakness of RIMM to the Nasdaq Composite index over the past 52 weeks, most likely a result of investor angst and focus on the courtroom proceedings:
OK, from looking at the one year chart on RIMM I'm convinced from a technical standpoint that RIMM will be moving higher from here. On top of that, I also know that RIMM has about 14.5 million shares of its float sold short--about three full days worth of average volume, which means this stock could get a very nice day trading short squeeze on any good news for the company. In fact, I'm going to set a two-month price target of $92.00 per share on RIMM--which is approximately the price it would be at had it simply matched the performance of the Nasdaq over the past year.
So what will I be alerting DaytradeTeam members to do on RIMM Tuesday?
Well, as most of you know, I really hate risking a penny more than necessary on a position. With RIMM shareholders waiting on pins and needles for the whim of a judge to be passed down, it would be a big mistake to buy RIMM stock and risk a full $67.50 per share, so I'll be looking for limited-risk, bullish opportunities on RIMM options trading instead.
Tuesday morning I'll be analyzing the options chains on RIMM and looking to alert members to either one of these two positions:
Make Sure You Get This "Extreme Potential" Alert on Tueday:
CLICK HERE to Start a DaytradeTeam Trial RIGHT NOW
When looking at the one year chart of stock trading on RIMM, the first thing I notice is a head and shoulders reversal pattern that has just been confirmed with Monday's close near $67.50. The other thing I notice is the relative weakness of RIMM to the Nasdaq Composite index over the past 52 weeks, most likely a result of investor angst and focus on the courtroom proceedings:
OK, from looking at the one year chart on RIMM I'm convinced from a technical standpoint that RIMM will be moving higher from here. On top of that, I also know that RIMM has about 14.5 million shares of its float sold short--about three full days worth of average volume, which means this stock could get a very nice day trading short squeeze on any good news for the company. In fact, I'm going to set a two-month price target of $92.00 per share on RIMM--which is approximately the price it would be at had it simply matched the performance of the Nasdaq over the past year.
So what will I be alerting DaytradeTeam members to do on RIMM Tuesday?
Well, as most of you know, I really hate risking a penny more than necessary on a position. With RIMM shareholders waiting on pins and needles for the whim of a judge to be passed down, it would be a big mistake to buy RIMM stock and risk a full $67.50 per share, so I'll be looking for limited-risk, bullish opportunities on RIMM options trading instead.
Tuesday morning I'll be analyzing the options chains on RIMM and looking to alert members to either one of these two positions:
- A Bullish Vertical Credit Spread that profits as long as RIMM stays above $60/share for the next month (and only risks $3.40 in the process)
- A Directional Call Trade that buys either the 80 or 85 call options for the March or Jun 2006 expirations. These positions would likely produce a gain of $6-$9/contract in the event that RIMM does get a short-squeeze higher, but only lose $1.50-$2.00/contract in the event that RIMM completely falls apart to new lows.
Make Sure You Get This "Extreme Potential" Alert on Tueday:
CLICK HERE to Start a DaytradeTeam Trial RIGHT NOW
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