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New member Russell Gold is an investment research analyst. Russell Gold fields of interest include technical analysis, macroeconomics, demographics, financial history and energy policy. His published topics include; stock options, dividend investing, technology, services, finance and search... More
  • Research In Motion Unusually High Stock Option Volume 3 comments
    Aug 9, 2012 2:51 PM | about stocks: BBRY, BLK

    Research In Motion Unusually High Stock Option Volume

    Over 100,000 Research In Motion Limited (RIMM) option contracts were traded August 01, 2012. For Research In Motion this is both unusual and significantly high trading volume. The trades were made with the January 2013 expirations.

    The trade is most likely employing a strangle option strategy in the hopes of a significant move in share price. With a strangle, options expire at the same time, but unlike a straddle, the options have different strike prices.

    Research In Motion stock stood in green territory most of the day, opening much higher in the early morning trade reaching $7.39. However, as the market close approached, RIMM shares turned negative, closing at $7.12.

    What was in investors minds? How much that option strangle cost. The cost of 50k in-the-money $8.00 strike puts, approximately $9 million ($1.80 per contract x 50,000 contracts x 100 shares), the cost of 50k calls, $1.75 million. $7,250,000, that is quite the cost difference.

    (click to enlarge)Research In Motion RIMM Call Calendar January 18, 2013

    (click to enlarge)

    The two single block trades consisted of one 50,000 11.00 out-of-the money strike calls and one 50,000 8.00 in-the-money strike puts. High volumes in stock options are very important in predicting future stock prices. Below are the two trades consisting of 50k contracts (1 contract = 100 shares).

    (click to enlarge)Research in Motion High Call Option Volume January 2013

    (click to enlarge)

    An important date to keep in mind, Research In Motion second quarter 2013 results are scheduled for September 27, 2012. Research In Motion last reported their 1st Quarter, Fiscal Year 2013 earnings June 28th. First quarter results disappointed the street and the stock fell sharply. To make matters worse, after the results of the report the company announced a planned 5,000 employee layoff. Yesterday, Research In Motion new CEO Thorsten Heins announced another 3,000 employee cut saying he would transform RIM into a "lean, mean, hunting machine."

    One notable RIMM shareholder is BlackRock Inc. (BLK). Much like Research In Motion, BlackRock is going through some of its own problems. This summer BlackRock lost Robert Doll, senior managing director and chief equity strategist; Susan L. Wagner, a founding partner and vice chairman; Robert Capaldi, senior client strategist; and Daniel Rice, a high-profile money manager. BlackRock Chairman is seeking to reverse withdrawals from active funds and boost assets as its acquisition spree ends, is expanding top leadership and shaking up its investment unit in the most sweeping overhaul since it became the world's largest asset manager. Looks like both Research In Motion CEO Thorsten Heins, and BlackRock Chairman and CEO Laurence D. Fink are overhauling and moving forward.

    Here is a breakdown of other major RIMM shareholders.

    (click to enlarge)

    Stocks: BBRY, BLK
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Comments (3)
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  • samshepard567
    , contributor
    Comment (1) | Send Message
     
    Why do you think there was such a large position?
    7 Aug 2012, 12:40 AM Reply Like
  • Russell Gold
    , contributor
    Comments (244) | Send Message
     
    Author’s reply » Just a Reminder: Apple Stock Dividend, Last Call http://seekingalpha.com​article/​787261-apple...
    8 Aug 2012, 08:31 AM Reply Like
  • tradewin
    , contributor
    Comments (653) | Send Message
     
    Good information. Another recent SA article mentioned RIMM as a possible play. Hoping for a short squeeze won't make it happen though. There is a heavy amount of short interest in it.
    17 Sep 2012, 11:13 PM Reply Like
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