Why Buy RIMM, and How?

7 Reasons Why I am Interested in RIMM:

1. Has the company performed well consistently?

How RIMM Scores:

RIMM's return on equity has been consistently above the Diversified Commun Svcs industry's average ROE over the last five years.

What This Means:

This meets The Warren Buffett Way guideline for a company that is performing well annually.

2. Has the company avoided excess debt?

How RIMM Scores:

RIMM's long-term debt/shareholder's equity ratio has stayed below the Diversified Commun Svcs industry's average over the last five years.

What This Means:

This signals that RIMM's management is not relying on debt to boost returns on equity

3. Can managers convert sales to profits?

How RIMM Scores:

RIMM's net profit margins have been consistently above the Diversified Commun Svcs industry's average over the last five years.

What This Means:

High profit margins reflect not only a strong business but management's tenacious spirit of controlling costs.

4. Are managers handling shareholders' money rationally?

How RIMM Scores:

The number of RIMM's common shares outstanding has decreased over the last five years.

What This Means:

This is a sign of rational management. When executives actively buy back a company's shares in the market, they are demonstrating that they have the best interests of their owners at hand rather than a careless need to expand the corporate structure.

5. Has management actually increased shareholder value?

How RIMM Scores:

Over the last 10 years, investors have created $3.03 in market value for every dollar in retained earnings.

What This Means:

This signals a company that has been recognized by the market for earning above-average returns on retained capital.

6. Has the company consistently increased owner earnings?

How RIMM Scores:

RIMM's owner earnings have an average annual compound growth rate of 46.97% over the last five years.

What To Look For:

This is especially notable if RIMM has experienced different competitive forces or economic cycles during the same time frame.

7. Is the stock currently selling at a 25% discount to intrinsic value?

How RIMM Scores:

RIMM has an intrinsic value per share of $102.12. Assumptions: projected earnings growth rate for years 1-10 is 22.78% and 5.00% for each year after that. The discount rate used is 10.00%.

RIMM currently sells at $61.36 per share, which is a 60.09% discount to intrinsic value.

What This Means:

This margin of safety helps create a cushion that will protect Buffett-and you-from companies where future cash flows are changing. You can adjust earnings estimates and the discount rate yourself to see how intrinsic value calculations can change.

Interested in RIMM but Fearful of the near future.

I love the use of options in my trading my question when looking to buy a stock is can I buy it cheaper than the current price and how?

One way is the use of a Short Put...what is a short put?

The best way I can explain what a short put is is this...
A short put is the act of selling the right to sell a stock at fixed price for a set period of time. By doing this the seller of the put now has the obligation to buy the stock any time the stock price should trade below the "fixed" price otherwise known as the strike price (This would mean the option is In The Money or ITM.)
The sell of the put will receive cash or a credit for doing so. That money is the sellers to keep however as long as the option is open the credit is unusable capitol. Since the options was sold when opened it would need to be bought in order to be closed out.

EX:
I Sell 5 contracts of a Put for RIMM, which closed at $58.73,
Using the 60 strike price for the November expiration month I would receive about a $3.25 credit. It would look a bit like this:
STO 5 NOV 60 SP = ($3.25 x 500) $1,625

Until the Saturday following the 3rd Friday of November I would now hold the obligation to buy 500 shares of RIMM at $60 a share (this would cost $30k) MINUS my credit of $1,625 total cost also known as total Risk would be $28,375. Only if I am assigned my option, my broker however would more than likely require half if not all of the risk available in order to open a position like this, commonly known as a Naked Put.
If I have the capitol and was looking to buy the stock anyway why not use a naked put?
I could go out and just buy RIMM at its current trading price of 58.73 per share which would cost about again using 500 shares... $29,365.

Using the naked put would save me about $1,000 bucks.

The Fear of Trending Lower???
The best way to calm this fear is to buy a put at the same strike price put use a different expiration month (usually about 3 - 6 months of time value.) Also known as a Put Calendar.
By adding this Long Put this now gives me the right to sell the stock at 60 the protection is this; If i am assigned the short put and the stock price continues to drop my Long Put will gain value so when new support is found I could then sell the long put and book the profit in essence reducing my cost basis by what ever the difference comes out to be.

EX:
STO 5 Nov 60 SP = (3.25)
BTO 5 Mar 60 LP = 7.70
Net Debit or Cost of the Trade = 4.45 ($2,225 = RISK)

For more Information or to set up a time for some One on One meetings about how to use puts in this market... Please contact me, Coach Nuge, at:

InvestingDAZE@gmail.com

Make It a Great Weekend!!!

Profiting from Implied Volatility

The most common view of those that are unfamiliar with options trading is that it is “RISKY.” One of the main reasons for this is the changes in Implied Volatility can alter the option’s price in a way that is too often misunderstood. Anyone that has entered a straddle the day before earnings only to have no significant move up or down in the stock price, more than likely has witnessed a drop in their options value the next day…It would be safe to say that the finger of blame could be pointing in the direction of implied volatility and how rapidly it can decrease.

Understanding and controlling implied volatility is critical to any option trader’s success. One way to manage it is to buy options between earnings periods when implied volatility is often closer to the low of its range than the high. Since part of an options price will increase/decrease due to changes in the implied volatility as represented by its VEGA amount. The relationship is for every 1% increase/decrease in implied volatility the options value will increase/decrease by the VEGA amount. Therefore the result from a 10% increase/decrease in implied volatility could mean a great return or an outstanding loss of invested capital.

How am I profiting? By buying my options when implied volatility is low, usually about 6 weeks before an earnings event… If the stock moves, that is just a bonus! On the other hand I will never make money with the use of options if I don’t know how and when to exit. Having a primary and secondary exit plan is essential to consistent profits when trading.

When should I exit in this type of situation? The day before earnings when IV is at a peak!

Here are some stocks between earnings with low Implied Volatility:

• Research in Motion (RIMM), maker of the Blackberry is a good candidate at present. The company is not scheduled to releases earnings again until September.
• Apple Computers (AAPL) who is now a competitor of RIMM doesn’t have an earnings announcement again until October.
• Pharmaceutical company Merck (MRK) is in between earnings and doesn’t have another announcement until October.

It is all about the J O B S

They say the unemployment report is a lagging indicator...Try telling that to the one who is unemployed...I would guess that they would tell you that is the leading indicator for their financial problems right now.

Don't get me wrong, I understand what they mean by "lagging indicator" but this latest report tells me a lot, it confirms a lot too. One thing I cant help but think about is the unemployment benefits extension plan as part of the American Recovery and Reinvestment Act (ARRA) that was signed by President Obama back in February. Are our unemployment issues, as bad as they seem to be right now, really a whole lot worse? There are a lot of people that are struggling right now, family, friends and close acquaintances. Some have made bad decisions, some have put too much faith in others (people they thought they could trust.) Most are struggling right now as a result of bad decisions made by a very small percentage of our population, very small group of individuals.

What will spark the turn around? (comment here)

In my opinion...You have to make money in order to spend it. And the only way you can make money is buy working, using your talents to create something of value that people will want to use and share. Unless your the Federal Reserve, why then you can really just "make" money.

My 2 cents for what it is worth...Stay protected, use common sense, ask a lot of questions and most of all be honest with each other and yourself.


Thanks for reading, Coach Nuge

As for my current positions due to the short trading week, I am holding and will be looking for adjustment opportunities next week.

Stay tuned.

Quick Thoughts on RIMM

It looks like the 200 day EMA (Exponential Moving Average) is showing strong signs of support.

Also, as the stock price has dropped so to has the volume, this is a very good sign that the momentum is shifting, or at least the selling is slowing down. Couple this with the MACD and the MFI both showing an up turn in the stock.

I want to take advantage of the potential move back up but I am not 100% in the bullish (short term, YET.) So, I have legged into a September Long Call position, wanting to have a total of 10 contract I have open just 5 for now.
What I am going to be doing is setting up another calendar type trade...but adding all my positions at different times when I see certain indicators and pricing triggers.

For more Information contact me directly at...
CoachNuge@gmail.com
OR
InvestingDAZE@gmail.com

RIMM In China?

China Telecom May Bring Blackberry to China

How to play this type of information? I have always been taught that you "BUY the Rumor and SELL the News"

There are many ways to play this, it really depends on a few key factors...

• Capital. Portfolio Size. How much trading capital do you have.
  
• Risk Tolerance. How much $$$ are you willing to risk.
• Involvement. How attentive/active do you want to be, can you be.
• Education. How comfortable/educated are you with your trading methodology.
  

We are all in different situations, financially, physically, etc. I always like to plan according to my situation and then follow through. Advice and help from others is great, but like my Father told me back when he was at the peak of his financial career, "Son, nobody cares about your money more than you do..."

So with these recent "rumors" on RIMM I will be analyzing some possibilities as it fits my situation and sharing that with you. Who knows it may help you in your situation...

Stay Tuned...

For more direct One on One support contact me anytime via email: coachnuge@gmail.com