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Research In Motion  
About The Company
Market Cap 29.1B
Revenue (FYR) $15B
EPS (TTM) $6.36
Shares Out. 521.8M
Book Value $13.64
P/E 8.9x
Price/Sales (FYR) 1.5x
P/Cash Flow (TTM) 7.3x

Research In Motion Ltd is a profitable Communications Equipment company that trades on the TSX and the NASDAQ. Research In Motion Limited (RIM) is a designer, manufacturer and marketer of wireless solutions for the worldwide mobile communications market. Through the development of integrated hardware, software and services that support multiple wireless network standards, RIM provides platforms and solutions for access to information, including e-mail, phone, short message service (SMS), Internet and intranet-based applications. RIM's portfolio of products, services and embedded technologies are used by organizations worldwide and include the BlackBerry wireless solution, the RIM Wireless Handheld product line, software development tools and software. RIM operates offices in North America, Europe and Asia Pacific. 

 

 

 
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By using this site, you agree to be bound by its terms of use. The full terms of use can be read here. If you do not agree to the terms of use, do not access or use this site.
Nothing presented is financial advice, trading advice or recommendations. Everything presented is the author's ideas only. The author accepts no liability for its use including errors and omissions. You alone are solely responsible for your own investing and trading. There are considerable risks involved in implementing any investment strategies and losses can be large. Trade at your own risk.

 
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  RESEARCH IN MOTION (RIM) - 2011
ONGOING EVALUATION & TRADE  - Year 3 (OSCILLATOR ADDED)
This trade is taking place on the TSX. (RIMM - NASDAQ) The same trade could be done on the NASDAQ.
This is a trade using the 10-20-30 moving averages strategy (read the 10-20-30 trading strategy paper here) for timing of my option trades. This year (2011) I have added the Oscillator to the strategy to see if it can assist in pinpointing the timing of the trades.  Nothing on my site is financial advice or recommendations.

GOAL: Average 15% a year in income

OBJECTIVE: I am using the 10-20-30 moving averages strategy combined with the Oscillator to assist in deciding when to sell puts and calls and buy to close them. If at any time I am holding shares, it will be for short periods only. The focus is on selling option positions for income to meet the goal's objective
.
SUMMATION: My chart with each transaction, shows how I am interpreting this rule and applying it and the oscillator to assist my decision making process to time my trades. I am following this strategy to see if I can use the 10-20-30 moving averages strategy consistently for profits. There is no fool proof way to invest in stocks. I am aware that I cannot just blindly follow a technical indicator but must look at numerous factors. By writing up each of my trades I can build a history to re-examine each trade to determine what factors I am considering that are working and which factors are not. I will keep my quantities to within 5 contracts for each position taken. I am also doing a smaller number of contracts to see if even with a small capital I could use this strategy.

I am also aware that the strike position taken has a large impact on not just income, but also on risk. I am always focused on risk and plan to stay out of the money with my strikes as much as possible.

**Notes on the percent return - I am not breaking this trade down by month or day or year. Instead I am taking each position and calculating the simple percent return on the trade position over the period of the trade. Percent returns in brackets indicate percent given back when the position is bought to close (BTC).
BTC = Buy To Close    STO = Sell To Open

RIM TRADES BY YEARS
VIEW RIM-2011 TRADES
VIEW RIM-2010 TRADES
VIEW RIM-2009 TRADES
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Should you find my strategy and ongoing evaluation of this trade of value I hope you will consider a tip for the time I spend detailing out this trade. I have set up a Paypal account for those who would like to donate. Thank you in advance. Remember, nothing on my site is financial advice. They are just my ideas and opinions. Investing is risky and losses can be large. Trade at your own risk. Read the terms of use

 

 

YEAR 1: 2009 - Trade Commenced Jun 2 2009
Goal for 2009: 7% (7 months)
Strategy: Sell Naked Puts Until Assigned
 
Capital In Use At End Of 2009 104,007.00
Income Earned in 2009 (7 months) 9,070.50
Return On Capital in 2009 (7 months) 8.7%
   
YEAR 2: 2010
Goal for 2010: 15%
Strategy: Sell Naked Puts Until Assigned
 
Capital In Use At End Of 2010 32,000.00
Income Earned in 2010 12,533.25
Return On Capital For 2010 39.16%
   
YEAR 3: 2011
Goal for 2011: 12%
Strategy: Sell Naked Puts Until Assigned
 
Capital Currently In Use 0.00
Income Earned in 2011 3170.00
TOTAL INCOME EARNED TO DATE 24773.75
Total Of My Own Capital Required 0
Number Of Shares if assigned 0
Share Price Valuation
(Total Capital Required/Number of shares)
0
TRADE COMMENCED June 2 2009
GOAL FOR 2011: 15%

ONGOING STRATEGY - 10-20-30 Moving Averages Strategy With Oscillator
* ACTIVE TRADES ARE HIGHLIGHTED IN YELLOW

 

Capital
Committed
Jan 4 2011: The 10 day has definitely flattened out and today's action is turning the 10 day. While not maybe up, it is definitely keeping it flat. I closed my Jan 64 Naked calls today. I will wait another day to see what develops before selling naked puts.

Jan 4 11 59.00 BTC 5 Naked Calls Jan 64 @ .29 (0.45%)     13.25   (158.25) 21,445.50 0.00
Jan 6 2011: The 10 day is definitely swinging up and it would appear to only be a matter of a couple more sessions for the trend to move back up. Today I sold naked puts.

Jan 6 11 60.00 STO 5 Naked Puts Jan 60 @ 1.11 1.8%     13.25   541.75 21987.25 30,000.00
Jan 20 2011: I have included the image below showing yesterday's action and today's action. Yesterday RIM took a good fall. The 20 day was showing a downturn by the noon hour and I tried to close my puts. I could only get 2 filled. Today I got 3 more filled to close the trade. Yesterday I sold naked calls again because the 10 day shows the stock is turning. Tomorrow is Friday and options expire, so why would I close just a day or two early? Simply because I am staying strictly to the 10-20-30 strategy. That strategy showed me yesterday that the stock was turning. It could easily end up at or below $60.00. However for .10 cents why not close early and then apply my capital to the naked call side of this strategy?

Jan 19 11 64.00 STO 5 Naked Calls Feb 66 @ 1.20 1.8%     13.25   586.75 22574.00 63,000.00
Jan 19 11 64.82 BTC 5 Naked Puts Jan 60 @ .10       9.50   (27.00) 22547.00 51,000.00
Jan 20 11 62.30 BTC 3 Naked Puts Jan 60 @ .10       10.75   (40.75) 22506.25 33,000.00
OSCILLATOR ADDED TO 10-20-30 MOVING AVERAGES STRATEGY

Jan 31 2011: I have now added the Oscillator to my arsenal of tools for the 10-20-30 moving averages strategy to see if it will assist me in my timing of selling naked calls and puts.

I am using the OSCILLATOR to look for overbought and oversold conditions. When the stock is oversold I will look for a bounce. When overbought I will look for a sell off.

On Jan 31 (today) I see that the oscillator shows oversold and the stock fell from 60.50 to 58.70. The 10 day is falling rapidly down and the signal of oversold could tell me that a bounce is going to occur in the next day or two. I closed my naked calls today based on the oscillator and the 10-20-30 signal.

Jan 31 11 $59.00 BTC 5 Naked Calls Feb $66 @ .24 (0.36%)     13.25   (133.25) 22,373.00 0.00
Feb 3 2011: The Oscillator was correct and the stock is trending up. Nice to have closed early and locked in my profit. I could have sold naked puts yesterday but I wanted to wait for this morning's action first. Today I sold naked puts.

Feb 3 11 61.80 STO 5 Naked Puts March $60 @ 1.90 3.1%     13.25   936.75 23,309.75 30,000.00
Feb 17 2011: The Oscillator is showing that we are nearing overbought. The 10-20-30 shows that the uptrend is underway. The stock though is above $68.00. I sold the naked puts just two weeks ago. I can close today for .30 cents. For me the secret is that I believe that Research In Motion is stuck in a trading range. I want to free up my capital to get ready to sell naked calls. I closed my naked puts today.

Feb 17 11 68.25 BTC 5 Naked Puts March $60.00 @ .30 (0.50)     13.25   (163.75) 23146.50 0.00
Feb 23 2011: The oscillator again was correct. The stock was becoming overbought and now it is selling off. The 10 day is flattening out but it is not crossing but instead looks to be indicating that we could be entering a sideways pattern. It's tough to call at this stage. I have a large amount of cash built up. The March 68 call is trading for $1.11 but the March 70 is at .70 cents. For 1% I will sell the March 70.00 call. I have been in March already so I am basically adding to my position. The stock has not seen $70.00 for some time and I do not mind closing this trade early for a small profit if the trade should turn against me and the stock move higher.

Feb 23 11 66.30 STO 5 Naked Calls Mar $70 @ .70 1%     13.25   336.75 23483.25 35,000.00
Mar 15 2011: Nice movement sideways and then down. With just a few days to expiry, I will watch but I will probably let this trade expire.

Mar 18 11 $60.00 Expiry: 5 Naked Calls Mar 70 expired             23483.25 0.00
Mar 18 2011: The oscillator is hanging near the oversold indicator. The trend is starting to move up although the 10 day is not crossing the 20 or 30. With neither the oscillator showing anything and the 10-20-30 not signaling that I should be selling puts or calls, I have to wait. In order for this trade to follow the strategy it is important for me to remain consistent. Right now there is no clear indicator. It could be that the earnings announcement for next Friday is keeping the technicals under wraps. I will wait a few more days.

    NO CAPITAL STILL COMMITTED             23483.25 0.00
Mar 24 2011: Today's move was very nice. The oscillator though is not showing much and the 10-20-30 still is giving me no clear signal. Tomorrow RIM will announce its earnings and that should move this stock one way or the other.

                  23483.25 0.00
Mar 25 2011: Rim's earnings were better than expected but the market didn't like the forward looking statement as management warned that earnings will be pressured in the short term as the company unrolls its Playbook product in which RIM has spent heavily. Rim tried to convince investors that the short term pain in earnings will lead to long term gains. Most investors though are not buying the corporate outlook. The problem that RIM faces is investors are concerned that RIM cannot survive the onslaught of competitors like Apple. Many large investment houses are concerned and on Friday many analysts lowered their forecasts for RIM. There are huge short positions on RIM and according to analysts, many of those short sellers did not cover on Friday even with the 10% drop. This shows they are confident that this stock is going lower.

 .

RIM remains a huge player in the wireless communication field. However the Torch did not turn consumers back to RIM and it is questionable how well the Playbook will do. As well the Playbook does not offer RIM the same profit margin as the blackberry. On the positive side, Rim is selling at only 9.2X earning and today's drop of better than 10% could be overdone or there could be a small bounce and then a move lower. The Oscillator shows oversold which is common with so much selling but in this case might not mean a bottom is in place. The chart below is for 1 year and back in September 2010 this stock was trading just below $45.00.

This trade is following the 10-20-30 moving averages strategy. If I was not following the strategy I would have been tempted to sell the May $50.00 put. However for the 10-20-30 strategy to work, I have to wait for the proper signal. Today no signal was given so I have done nothing. It is important to remember that consistency is the most important part of a strategy. While emotionally I may want to jump in and sell the puts, the technicals do not confirm it. To me, the key to successful investing is following a strategy that has a proven record. Last year the returns were terrific and this year so far the 10-203- strategy has paid very good returns. I will wait for the proper signal to arrive and then make the trade.

Every day there are opportunities for selling options. I don't see any need to rush into RIM without the confirmation of the moving averages strategy.

I believe RIM will under perform for some time and until earnings can show that the playbook is a winner, this is a stock I would not want to own. I feel sorry for those investors who bought this stock at $90.00 and higher and continue to hold it without putting in place proper protection strategies. I think the 10-20-30 moving averages strategy is proving that options are a much better way to trade in stocks for profit and income. Last year the stock fell into the low $40.00. I believe that over the next few months it could easily be heading there again.

RIM's market share is decreasing and it's market cap is following as the stock drops. This will not be an easy company to turn around. RIM grew during a period when there were few competitors. That time has passed and as smart phones become more widespread the competition will get even fiercer and profit margins thinner. This is not a stock for the faint of heart. I will continue with my strategy but if option premiums begin to evaporate if the stock falls lower, I may have to end the strategy and find another stock. Volatility and large price swings are necessary elements to make the option premiums large enough to risk my capital. Should this happen, it will then definitely be time for me to say goodbye to RIM.

                  23483.25 0.00
April 4 2011: Rather than recovering from the March 25th selloff, RIM has floundered and continues to drift lower. However technically there are some interesting developments that tell me my time to sell some naked puts may soon be arriving. There is no signal yet from the 10-20-30 moving averages, and in fact they should more downside to come. However the Oscillator shows us that the stock is finally flashing oversold. This could be a short term bounce or even a short term bottom. After all RIM is making billions of dollars and has no debt.

Momentum is still negative, but it is not growing but is flat.

 .

MACD is still negative but it is not widening which could be a good sign. Last is volume which is decreasing, another possible sign of a short term bottom and a chance to sell naked puts. It may not be much further ahead before I will be selling naked puts on RIM.

Let's go out a year on RIM and see what has been going on. Last August and September RIM fell into the $45.00 range. I guess we could say that marks a bottom for the year, but looking at the chart technically there really is no true support in RIM. If there is any support it probably rests between the $45 to $50.00 level, but more likely buyers will step in when the stocks drifts below $50.00 or $48.00. Resistance is very easy to spot - definitely at $65.00 which the stock has pushed up against several times.

Therefore, short term, selling naked calls at the $60 to $65 level and naked puts at $50 to $45.00 level are probably the best bets for me. Today the May $50 naked put is trading at around a $1.00 or 2% and the $60 call around .80 cents or about 1.25%. So there are still good premiums and lots of reason to keep the moving averages strategy in play on RIM for the time being. I will be watching those two strikes and look to sell them shortly.

                  23483.25 0.00
Apr 14 2011: RIM just cannot get a break. Today's news was that the Wall Street Journal and New York Times gave less than glowing reviews of the Playbook citing a lack of email, calendar and address book. Seems weird that the device wouldn't have these. Perhaps they will be added before it is released. As well they also indicated there was a lack of serious apps for the Playbook. Hopefully Playbook will not equal "Book Of The Dead". At any rate since the bad news of March 24, the stock has fallen almost 20%. But yesterday and today (even with the bad reviews) it seems the technicals may be pointing to an end to the selling, at least for now. With momentum, MACD and Volume all showing that buyers have finally stepped in, perhaps we will see a bounce. Right now premiums for the puts are poor. The May $46 naked put was priced .30 bid and .37 ask. Not very convincing for a naked put sell. I wouldn't touch the $48 at this level.

Here is today's action. (April 14) Rim sold off first thing and kept falling until just before noon. Even though the selling continued, MACD and Momentum already indicated that the stock was turning positive. For those who love to day trade I bet this was a great play.

The strategy now will be to sell the calls when the stock turns. Upside I think it might make it to 56. I plan to sell the 58 naked call should the stock get moving. As of today, the 58 calls were selling for .50 cents, which again is not convincing enough to make me put my capital at risk. But if RIM turns higher then premiums should jump. Upside I think it could probably recover half of what has been lost or 10%.I shall wait and see what the next few days brings.

Apr 15 11 52.90 STO 5 Naked Calls 21May11 58 @ .70 1.2%     13.25   336.75 23820.00 29013.25
APRIL 15 2011: COMMENTS: The capital I have made is now at $23,820.00. With 5 naked calls sold at $58.00 the amount of my own capital being now used has declined to $5180. This is the goal of selling options. To earn enough capital that eventually my positions are being paid for by other people's capital. Kraft is the first stock that is totally being covered by capital earned from my trades. RIM is getting very close and should reach that point sometime this year.
Apr 28 11 53.80 STO 5 Naked Calls 18Jun11 58 @ 1.45 2.5%     13.25   711.75 24531.75 58026.50
Apr 29 11 45.80 BTC 5 Naked Calls 21May11 58 @ .03
COMMENT: Today RIMM collapsed as it fell more than 14% on the news from the company that next quarter earnings will be lower than originally forecast. You can read my assessment of where I think RIM is heading and my strategy now for RIM here.
(0.05)     13.25   (28.25) 24503.50 29013.25
MAY 5 2011: RIM has really been pummeled. Today the stock finally started having a bit of a bounce. Look below at today's chart. You can see that as the bounce got going, more analysts downgrades came out on RIM. Some estimated the stock will fall to $35.00. So the mighty analysts who once loved RIM even as it tumbled have now turned on their once favored stock. I suppose it's a case of kick them even more now that they are down or perhaps the analysts are so made at being so wrong, that they are taking their anger out on RIM. Who knows and who cares. RIM is still offering great option premiums so I am staying with naked calls for the time being.

I had the oscillator open from doing my SPDR SPY HEDGE and I noticed that the oscillator showed overbought in the morning. I sold more naked calls here. There is no point in worrying about even closing the JUNE 58 puts right now. The chance of RIM running up in this environment is, in my opinion, slim to none. RIM's stock is so badly damaged it will take months for the stock to recover. This was an easy trade to make and an easy decision.

May 5 11 $46.80 Sold 5 Naked Calls RIM 18JUN11 $52 @ .92 1.79%     13.25   446.75 24950.25 55,026.50
May 12 11 42.10 Bought to close 5 Naked Calls 18JUN11 $58 @ .10 (0.25)     13.25   (63.25) 24887.00 26013.25
May 16 2011: The stock held for 5 sessions at support around the $45.00 strike, but eventually it had to give and the stock quickly fell to the $41.50 to $42.00 level. This does not mean that support is broken permanently. There are a lot of buyers at this level. The stock could see a fall to about $40.00 or so and then a move back toward the $45.00 strike. Remember RIM is not dead or anywhere near it. This is still a viable company with a lot to offer its clients.

 From here I really believe that RIM has to be undervalued. After a few sessions I closed my June 52 naked calls. It's obvious that it's worth closing. It has only been a few trading sessions since I sold the Jun 52 naked calls. But after all, they are all the way out to June 18 and the whole concept with my trade on RIM is to follow the 10-20-30 and oscillator to decide when to get and out of the trades.

But it also means using common sense. I sold the calls just a few sessions earlier for .92 so to close them this quickly at .20 cents is very prudent. With no capital now committed to RIM, it is a question of seeing if the stock can bottom here and push back up so I can sell naked calls again. The Ultimate Oscillator still shows oversold, but by adding MACD, it is indicating a positive upturn at 0.11. The ultimate oscillator though, measures buying pressure and right now it indicates no buying pressure as there are still lots of sellers.

I believe it is best to close the contracts, lock in my profit and watch the stock to see if there is a bounce.

 

May 16 11 41.72 Bought to close (BTC) 5 naked calls RIM 18JUN11 $52 @ .20       13.25   (113.25) 24773.75 0.00
Jun 17 11 27.24 Expiry: JUN $58 puts expired                
RIM TRADES BY YEARS
VIEW RIM-2011 TRADES
VIEW RIM-2010 TRADES
VIEW RIM-2009 TRADES

 

 

Disclaimer: There are considerable risks involved in all investment strategies. Trade at your own risk.
Stocks, options and investing are risky and can result in considerable losses. None of the strategies, stocks or information discussed or presented are financial advice, trading advice or recommendations. Fullyinformed.com is a private website. Everything presented and discussed are the author's ideas and opinions only.
By using this site, you agree to be bound by its terms of use. The full terms of use can be read here. If you do not agree to the terms of use, do not use this site. The author of fullyinformed.com assumes no liability for topics and ideas discussed, errors and omissions, ads and their content and external links. Any corporate insignia used are registered trademarks of their respective company or corporation and are being used for identification purposes only. All material copyrighted by FullyInformed.com. Reproduction in whole or in part prohibited. Copyright 2008

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