Sun, May 22, 2011 - Page 11 News List

Research in Motion stock: the next Palm?

Reuters, NEW YORK

Maximum profits will be made if RIM shares plunge nearly 15 percent from the current price to settle at US$37.50 at expiration, according to Caitlin Duffy, options analyst at Interactive Brokers Group.

A butterfly put spread involves a bet shares will fall, but only to a specific level. One profits by selling puts at a strike price that is between purchases at strike prices on each side, or the “wings” of the butterfly.

“Butterfly spreads on the stock suggest some options players expect RIM’s losing streak to continue into next year,” she said.

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