Bearish Action in Research in Motion (RIMM) Weeklies as Shares Extend Slide

RIMM – Research in Motion, Ltd. – The struggling mobile phone maker’s shares are in the single-digits today, down 5.75% this afternoon to $9.67, trading at their lowest level in nearly a decade. Put buying and call selling in the weekly options suggests there is further pain ahead for RIMM shareholders. Traders positioning to profit from further weakness in the price of the underlying snapped up more than 1,250 in-the-money puts at the Jun. ’08 2012 $10 strike for an average premium of $0.23 each in the first half of the session. Put buyers may profit at expiration later this week should shares in Research in Motion settle below the breakeven price of $9.77. Meanwhile, traders selling upside calls walk away with profits as long as shares in the Blackberry maker fail to rally by expiration this week. More than 6,200 calls changed hands at the $10 strike against open interest of 648 positions, and it looks like most of the calls were sold for an average premium of $0.06 each. Upwards of 2,100 calls were sold at the Jun. $10 strike today at an average premium of $0.28 per contract. Research in Motion in scheduled to report first-quarter earnings after the closing bell on June 28th. The Company last week forecasted an operating loss for the first quarter and said it had hired banks to look into strategic options.

HFC – HollyFrontier Corp. – The Dallas, Texas-based producer of gasoline and jet fuel popped up on our most active by options volume market scanner this morning following a flurry of activity in the July expiry calls and puts. Shares in HollyFrontier rallied at the start of the session after the stock was raised to ‘Buy’ from ‘Neutral’ at UBS, but those gains were short-lived, with the stock now down 3.3% to stand at $28.70 as of 1:25 p.m. in New York. The largest trade in HFC options today appears to be a bet that shares in HollyFrontier will settle in a narrow range by July expiration. It looks like one strategist initiated a short strangle, selling 7,665 puts at the July $29.5 strike and selling the same number of calls at the July $30.5 strike, all for a net credit of $3.60 per contract. The trader keeps the full amount of premium should shares in HFC settle within the $29.50 to $30.50 range implied by the strikes, with losses possible in the event that shares in the name exceed the upper breakeven price of $34.10 or slump below the $25.90 breakeven price on the downside.

HNSN – Hansen Medical, Inc. – Shares in the medical equipment maker are bucking the trend today, trading 11.3% higher on the session at $2.57 as of 12:30 p.m. ET. Options traders appear to be picking up in-the-money calls in the front month, perhaps to position for shares in Hansen Medical, Inc. to extend gains in the near term. More than 1,100 calls have changed hands at the Jun. $2.5 strike, with most of the volume purchased for an average premium of $0.28 apiece. Call buyers may profit at expiration later this month in the event that Hansen’s shares rally another 8.2% to surpass the average breakeven price at $2.78.

About Caitlin Duffy 373 Articles

Affiliation: Interactive Brokers

Caitlin Duffy joined Interactive Brokers in 2009. In her role as Equity Options Analyst, Caitlin provides daily market commentary; highlighting various options trades, trading patterns and strategies of interest. Through Interactive Broker's webinar program, Ms. Duffy presents a number of educational, options-related events describing the theoretical pricing of options, the option Greeks as well as options strategies.

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