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Dan Nathan's Research In Motion Limited (USA) (RIMM) Trade

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CNBC Options Action's Dan Nathan talked on the show about a bearish options strategy in Research In Motion Limited (USA) (NASDAQ: RIMM). He thinks that it could drop below $40, because it has lost the war with competition.

Specifically, Dan Nathan wants to buy the July 35 put for $0.20, and the July 45 put for $1.70. He also wants to sell two July 40 puts for a total of $1.20. This trade would cost him $0.70, and if RIMM trades at $45 or higher at the expiration, Dan Nathan would lose the $0.70 premium. If the stock trades between $40 and $45, he can make up to $4.30. If RIMM trades between $35 and $40 at the July expiration, the pay off would start to trail off, but he wouldn't lose money unless RIMM drops below $35.

Research In Motion Limited (USA) (RIMM) fell 14.03% on Friday, and it closed at $48.65.

Posted-In: Dan NathanCNBC Short Ideas Options Media Trading Ideas

 

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