Wednesday, February 9, 2011

RIMM: Buy Calls On Playbook, Says Goldman

Goldman Sachs’s options trading team this morning suggests buying April $65 call options on Research in Motion (RIMM) stock in advance of the introduction of the company’s Playbook tablet computer, which is expected to debut this quarter.

Initial indications of how the device is being received will be a stock-moving event, the analysts write, as will RIM’s earnings report on March 24th.

The options could play off of “attractive volatility,” the Goldman folks write:

With vol not pricing in the tablet launch in our view, 3-mth implied in its 5%-ile over a 1 year period, term structure upward sloping with April trading 1 vol below July, we recommend that holders of stock rotate into options for more levered exposure to the name. For investors that would like to position positively, the April $65 calls are $3.25 (5%) and provide investors with more levered exposure to the name with limited risks. Call buyers risk losing premium paid if shares close below $68.25 on April expiration.

RIM shares today are up 12 cents at $63.71.

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