No One

[Lord DarkHelmet]

I am considering opening a Bear CALL credit spread on RIMM.

Conservatively: (Trade 1)

Sell RIMM Jan 62.50 CALL / Buy RIMM Jan 70.00 CALL

credit of 0.36 / contract

More aggressive: (Trade 2)

Sell RIMM Jan 60.00 CALL / Buy RIMM Jan 67.50 CALL

credit of 0.86 / contract

I probably can enter 20 contracts with the the $15,000 margin call that would be required. Trade 1, RIMM would have to get back to $62.50, before Jan 22nd for me to start eroding my profits and breakeven would be $62.86. I don't see this happening. Trade 2, RIMM would have to get back to $60.00 before Jan 22nd for me to start eroding profits and breakeven would be $60.86. Definitely a little riskier. RIMM could recorrect and hit $60.00 by mid January.

Maximum profit on trade 1 with 20 contracts would be $720, or 5% of my margin requirement.

Maximum profit on trade 2 with 20 contracts would be $1720, or 11.4% on my margin requirement.

I am likely to do trade 1, just to see how the beginning of 2011 plays out. Volume has been low the last two weeks and I don't trust the chart. Plus the MACD is starting to correct and the Stochs are already in oversold territory. There may be a possible correction on the the upside, and I hate to be selling the 60 Calls, knowing that all RIMM has to do is correct ~3.5% for me to start sweating. The more conservative trade 1 allows me to tolerate a 7.7% upside correction before I am even at the strike and a 8.3% correction before I am at my breakeven. I like those odds!

Addendum: I should note that since I already have entered a BULL PUT spread on RIMM (Sell RIMM Jan 55.00 / Buy RIMM Jan 50.00), entering this Bear Call spread almost essentially turns my exposure on RIMM into a strangle at 55.00 / 62.50...it is just that I used a spread technique to limit my downside even further.