Reasearch In Motion (RIMM) will be releasing its earnings after the close of the stock market today. The company has in the past, done a good job of beating Wall Street estimates and the stock subsequently rewards its holders well the next day.

We expect more of the same and are recommending traders buy Research In Motion (RIMM) call options. We are hedging the trade with some puts to offer some protection against a downside. Wall Street is sometimes insatiable and (RIMM) could come out with phenomal earnings and the street might still deem them to be inadequate, although with the launch of new products recently as well as continued wider adoption of the company’s products, we would be very suprised if the company puts out negative earnings related news.  

The Trade: Buy the Research In Motion July $145 calls. For every three contracts bought, buy 1 Research In Motion 135 puts. We are recommending a trade of at least 6 call contracts and 2 put contracts. This will be slighty over $5,500. For those that can’t swing this, but would like to enter the trade, if you have risk capital of $700-$1400, you can buy 1 or two call contracts. These will not be hedged for downside protection, but again, there is a bigger chance of the company beating than not.

Notes: Watch this space and or subscribe to this blog is you have not already done so, we will be tracking (RIMM) all day and if can adjust the position to take some profits even before the earnings, we post accordingly.

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Yahoo (YHOO) shares traded almost twice as much volume today as they did yesterday. The shares are active on rumors that a new takeover bid from Microsoft might be forthcoming. This has made the options in Yahoo shares quite active as well and while the rumors may prove to be just that, there might be money to be made over the next couple days.

We will get word from the fed tomorrow as to what they will be doing with regards to interest rate, once that news is in and we know the direction of the market, we will look to purchase (YHOO) call options if the stock looks like it will maintain its positive stance. With just a $.59 move in the stock today, the 20 calls moved up 27% to close at $2.65 while the 22.50 calls moved up 70% to close at $1.31. If there is some upside to the underlying tomorrow, we will look to get in AND take early profits as opposed to waiting for a takeover announcement to emerge although we will continue to watch the stock’s behaviour to see what the institutions and smart money are doing.