Research-in-Motion Ltd. (NASDAQ: RIMM) shares are weak in a strong tape, down 5.4%, due to a downgrade to Sell at Citigroup. Implied volatility is up 10% on the day and option traders are active with 93,000 calls and 59,886 puts trading just two hours into trading. The volume has already surpassed the average daily volume and is mixed between buyers and sellers in both the calls and puts. One notable bullish trade was a new opening buyer at the $0.24 offer for 15,000 March $100 calls that are way out of the money, a lotto ticket type bet. Most of the other action is retail traders with some looking for a continued move lower and others buying on the dips looking for shares to be defended. Shares are now trading at a PEG of 0.8X and are historically cheap on an earnings basis for the Blackberry maker.
Joe Kunkle, OptionsHawk.com
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