Yesterday, the market got its first look at what Research In Motion's BlackBerry 10 is likely to look like when photos leaked online. RIM's shares jumped 5.6% yesterday, and have doubled in price since its September lows. The huge move has been driven by upgrades from analysts, and the belief that BB10 can save the company.
Option volume was heavy on calls yesterday, with two of them trading for every put. The biggest trade of the day was the purchase of 4,800 January 12-strike calls for $1.48, which was done with the stock at 12.61. This is a bullish bet that RIM will be above $13.48, or 6.9% higher, in 36 days.
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The new BB10 is RIM's latest effort to win back market share from Google,Apple, and Samsung. The phone looks similar to an iPhone – it has a large touch screen, minimal buttons, front and back cameras, and a home screen with apps.
The big difference between BB10 and other smartphones is the operating system it will run on. The software has been developed by RIM, and will feature the ability to have a work mode and a personal mode. This will enhance data security, and allow users to avoid seeing work emails on the weekend if they so choose. BlackBerries have been very popular with the corporate world, and this phone looks aimed to keep it that way. RIM has reiterated that they expect to launch BB10 in the first quarter of next year. And in addition to the touchscreen model, RIM will also release a model with a full QWERTY keyboard.
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Clearly the sentiment on RIM has changed in recent months, but I would be cautious about buying the stock at these levels. RIM has already doubled in the past few months, so it will be difficult for the stock to continue its blistering upward trend without significant news. I would also be wary of a "buy the rumor, sell the news" scenario surrounding the BB10 release, given that there is so much hype leading into it.
However, if BB10 does win favor with corporations and government entities along with consumers, RIM could indeed go significantly higher. If you want to play this stock, I would suggest buying call options for now, so that you can keep your risk limited.
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After the release, if RIM continues to look strong and BB10 is well received, then I would consider taking a long stock position. But I have no position in RIMM as of today.
Brian Stutland is Managing Member of Stutland Equities and a contributor to CNBC's "Options Action."
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