Stock / Symbol: [private_monthly]Research in Motion / RIMM [/private_monthly]
Price at trade post: $59.60
Option Strategy: butterfly call spread
Max Risk: $418
Max Reward: $100 or 25% by Dec 17th
Profit Range: $0 - $58 & 62 +
Max Reward Price: $0 - $57.50 & $62.50 +
Reasoning: It's time, once again, to take advantage of this stock's volatility coming into an earnings announcement. For the following butterfly call spread structure, we're looking for either a 4.5% + move down or 5% + move up. The last 3 of 4 earnings reports had this stock moving 7+ %
[private_monthly]
Trade Details:
Sell -2 RIMM Dec10 57.5 Call @ $3.20 for ($640.00)
Buy 4 RIMM Dec10 60 Call @ $1.79 for $716.00
Sell -2 RIMM Dec10 62.5 Call @ $0.88 for ($176.00)
for a net credit of (at least) $0.50 per contract. Suggest setting limit at $0.55 to see if you get filled there. Adjust limit lower in last 1/2 hour of trading if necessary
Requirements
Cost/Proceeds ($100.00)
Option Requirement $500.00
Total Requirements $400.00
Estimated Commission $12.95
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Chart:
[private_monthly]
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