For Whom The Bell Tolls: RIM In Focus After-Hours - Apple (NASDAQ:AAPL)

Downtrodden Research In Motion

RIMM

reports earnings after the bell today and analysts are expecting a profit of $1.19 a share on revenue of $5.27 billion from the BlackBerry maker. The estimates for the current quarter are $1.18 EPS on $5.12 billion in sales. Despite RIM's reputation for lowering guidance and the fact that the stock is off more than 70% this year, there has been brisk activity in the December 16 calls, which expire on Friday, as over 1,900 contracts have changed hands today. More than 800 contracts of the December 18 calls have traded as well. Volume across the December 13, 14 and 15 puts is approaching 6,000 contracts with less than 30 minutes left in the trading day. In a note out today, Cowen & Co. said the bad times are likely to continue for a while for RIM and the he shares will trail the market by 20% the next 12 months as they continue to fetch a “substantial discount to book value” based on several challenges, Barron's reported, citing the research firm. Maybe more declines in shares of RIM could spur more

acquisition talk

. Or perhaps potential buyers will shy away citing fear of trying to catch a falling knife. This was a $70 stock earlier this year, so beleaguered investors could be hoping and praying Google

GOOG

, Microsoft

MSFT

or International Business Machines

IBM

come to RIM's rescue. In the face of another potentially bad quarter and more downbeat guidance, a takeover may be the only thing to save this stock.

ACTION ITEMS:

Bullish:
Traders who believe that RIM might rebound want to consider the following trades:

January calls that are in the money or not far out. RIM is volatile enough to make this a decent trade

Long the stock outright with a long-term holding period to bet on a takeover.

Pray for a miracle.

Bearish:
Traders who believe that RIM is in for more pain may consider alternative positions:

Short the First Trust NASDAQ CEA Smartphone ETF FONE of which RIM is a component.

Sell the January 17 or higher calls for income. If today's number is bad, it's unlikely those options will come into the money

Buy Apple AAPL or Google, the companies that have been benefiting from RIM's demise.

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