Research In Motion (RIMM) 01 (Sep 08 - Oct 11)

[kennynah]

my unwillingness to go Short on RIMM has to do with the already depressed price, but not becos I dont believe it could not go down further, which I have no "feel"....

more so bcos if it ever gets into some more political challenges involving her services regarding security issues, that will result in revenue deterioration...and at some point, it will sure affect their global operations...and one thing leading to another, it will begin downsizing, lesser R&D commitment, and eventually dwindle into some serious growth stuntedness....

by the way, such security issues are not new. in fact, RIMM faced serious criticisms on this matter as far back as 2003...and until today, this matter is still unresolved....this only suggests either RIMM's lack of focus or arrogance...either way, it tells me this is not an exciting company

then perhaps, they could be bought up...

but before that happens, it has sufficient market share currently, to ensure they receive sufficient(i believe) maintenance revenue to allow for sustenance existence....and so, it might be sometime before those hairline cracks develop into some full blown catastrophe...

all in all.... perhaps, the price will just hover for a considerable amount of time....that may not generate sufficient ROI...

not compelling either way to Short or Long this counter... when compared to some other counters/assets

what do you think ?

[profittaker]

Hi Kenny, Share your thoughts. How about a volatility spread?

[kennynah]

hi profitaker...

if i believe that RIMM shares will not rise in the near term above $X, and given the current Implied Volatility is above the year's average, below might be a trade to consider

Short Sept 47.5/50 Vertical Call spread..risking $1.70 for 80cents for a 67% chance of RIMM staying below $47.5 by sept expiration on 18/9

what do you think ?

[iam802]

I have that in mind.

And with Sept expiration 18 days away, I believe time decay will be in our favour, right?

Note:
I already have existing position and is tempted to add a Short vertical call to it.

[kennynah]

yes 802... as you rightfully pointed out, theta decay is most aggressive as it approaches expiration on short option especially near or ATM strike...

however, becos it is a spread, you will also have a LONG Call strike, in my example would be the 50 strike, that is also high in Theta value but lower than the Short 47.5 Call theta value....consequently, the net effect is that the you wont feel the "theta effect" until it is just 1 or 2 days from expiration... in this example of short 47.5/50 call spread, the actual net theta is a mere -0.1

but if you choose short 47.5/52.5 call....then the theta is doubled at -0.2...but with this...your risk exposure is also correspondingly doubled...

[profittaker]

Thanks Kenny and 802 for kind post. No doubt I need to do more homework to craft the skills.

[kennynah]

you are very welcome profittaker....

there are many good options books at NLB... a good source of knowledge...i encourage you to read them thoroughly first before trying out options trading with real money... i'm sure you will find them educational and mentally stimulating...

good luck !!

[iam802]

I wonder if the Indian govt. is doing it to create jobs... on top of various security issues that they are facing.

----------------
BlackBerry to offer India access from Sept 1: govt source

http://www.reuters.com/article/idUSTRE67T0U920100830

(Reuters) - BlackBerry maker Research in Motion will give the Indian government access to encrypted data from September 1, while the Indian home ministry wants BlackBerry, Google and Skype to set up servers in India, a government source familiar with the matter said Monday.

India says it wants to fully track and read BlackBerry's secure email and instant messaging services that officials fear could be misused by militants.

Indian officials have also expressed concerns over security threats emerging from Internet-based messaging services from providers like Google and Skype.

"They have given some access, which we will operationalize from September 1," the person said, referring to RIM.

"They will have to provide full access to all communications that go through India. They will have to set up a server in India," the person said.

[iam802]

I am still holding my short on RIMM but is tempted to close my position soon.

So far, RIMM has been breaking down from around $48 to about $44 now.

RSI is fast approaching 20 and may be a good time to take some profits off the table.

[kennynah]

alright man... can buy one terrace house liao....