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May 4, 2012  Fri 12:13 PM CT

RIMM: SEE CHART GET CHAIN FIND STRATEGIES
Research In Motion hit an eight-year low today, and one large trader is positioning for even more downside.

RIMM is down 0.76 percent to $11.95 in afternoon trading after falling to $11.71 this morning, its lowest level since early 2004. Shares of the BlackBerry maker have been trending lower for the last year since trading above $48 going into May 2011.

Nearly 113,000 RIMM options have changed hands today, about 3 times its daily average. Its big option trade of the day is likely a roll.

A trader sold 20,720 June 13 puts for the bid price of $1.65 against open interest of 37,093 while buying 20,720 July 12 puts for $1.49, according to optionMONSTER's Depth Charge system. The previous open interest at the latter strike had been 4,484, so this is a new position.

This is likely a trader closing long puts in June and rolling them to a lower strike in July. The latter contracts are still in the money, so they will have a high delta (sensitivity to changes in the stock price). But the move also allows the trader to take some money off the table and maintain a bearish position while gaining more time for the strategy to work. (See our Education section)
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Sweet Spot Exceptions

As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

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