RIMM – Research in Motion Limited – News the Blackberry maker plans to start an applications store as well as consumer Internet services in China sent RIMM’s shares up 8.47% in afternoon trading to an intraday high of $53.65 by 3:25 pm (ET). Optimism on the firm’s expansion in the Chinese market was reflected in options trading patterns today as investors scooped up in- and out-of-the-money call options on the stock. Traders picked up at least 6,900 now in-the-money calls at the July $52.5 strike for an average premium of $1.11 apiece. Buying interest spread to the higher July $55 strike where some 12,800 calls were coveted by investors paying an average premium of $0.39 per contract. Investors long the July $55 strike calls make money if RIMM’s shares rally 3.25% over today’s high of $53.65 to trade above the average breakeven point to the upside at $55.39 by July expiration day. Other bulls bought 2,500 calls at the higher July $57.5 strike for an average premium of $0.14 a-pop, and purchased 1,500 calls at the July $60 strike for an average premium of $0.06 each. Investors targeting the July $75 strike shelled out one penny per contract to take ownership of approximately 2,100 call options at that strike. More than 138,000 option contracts changed hands on the smartphone maker by 3:35 pm (ET), with investors trading approximately 1.45 calls on the stock for each single put option in action during the session. The overall reading of options implied volatility on Research in Motion Ltd. declined 7.1% to stand at 38.47% just before the final bell.
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Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.
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