Sometimes less is more. That is certainly the case for Research In Motion (RIMM), which slashed working capital, inventory and margins to produce a loss that was much less than expected, propelling the stock higher today. Paper-thin margins has worked for Amazon (AMZN), so why not for RIMM? Buying the stock today based on the prospects for BlackBerry 10 seems like a huge risk since a buyer would be waiting until the first quarter of 2013 to see it rolled out. By that time, the iPhone 5 will have been in the market for six months, plus the Galaxy 3 will be mature in the market. It feels like a tough time to jump in. On the other hand, if you are looking to play a short squeeze or momentum trade, then RIMM is a prospect. I jumped in last night with a short of shares, but I've since changed direction covering those shares and adding a September $7.50-$8 call spread along with a short September $8 put for $0.25. I will ride this until late in the day, but will look to sell half if the value exceeds $0.37 at any point during the day. I felt the risk of a big move was to the upside, however, it was more difficult to buy before earnings.
Nike (NKE) tested downside support both after hours and in the premarket, and while I believe the $91-$92 area holds, there may be better places to find a trade or place money. If I were a buyer or holder of NKE, I would pursue a collar strategy (long put, short call) or an aggressive near-the-money call writing strategy....114 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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