Motorola, Inc. (MOT) – Shares of the maker of the Droid smartphone fell in morning trading but recovered during the session to add as much as 3 pennies or 0.35% to arrive at an intraday-high of $8.39 this afternoon. Motorola appeared on our ‘most active by options volume' market scanner today after one options player appears to have booked profits on a previously established bullish position. It looks like the investor originally purchased roughly 28,000 calls at the September $7.0 strike for an average premium of $0.70 each back on August 19, 2010, when MOT shares were trading at a volume-weighted average price of $7.55. The appreciation in the price of the underling since the calls were purchased lifted premium on the September $7.0 strike calls, allowing the trader to sell the contracts for $1.35 in premium apiece today. Net profits on the transaction amount to $0.65 per contract. Next, it looks like the bullish player re-opened, or rolled, the position to the higher October $8.0 strike where approximately 28,000 calls were picked up at an average premium of $0.10 a-pop. The investor starts to make money on the fresh batch of calls if Motorola's shares surge 8.5% over the current price of $8.39 to surpass the effective breakeven price of $9.10 by expiration. We note that the investor may walk away with profits on the new long call position before October expiration if circumstances going forward lift the premium on those calls and the trader opts to sell the position at an advantageous price.
Research in Motion Ltd. (RIMM) – Options on the Blackberry maker are a hot ticket item today ahead of the firm's second-quarter earnings report scheduled for release after the closing bell this afternoon. Frenzied trading ensued right out of the gate this morning with investors heavily trafficking in September and October contract call and put options. Shares are currently up 1.1% at $46.02 as of 1:45 pm ET, but earlier rallied as much as 2.3% to reign in an intraday high of $46.58. The overall reading of options implied volatility on the stock increased 5.1% in the first half of the session to top out at 58.22%, but has come off to stand just 2.6% higher on the day at 56.82%. Although more than 1.7 call options changed hands for each single put on RIMM thus far in the session, it does not appear that most traders are taking bullish stances ahead of the earnings report. Furthermore, call buyers observed populating RIMM could be hedging short positions in the underlying shares. According to one Bloomberg article this morning, "bets against shares of Research in Motion Ltd. have doubled since April" as traders position for the Blackberry maker's shares to continue to slide lower on steep competition from mobile making rivals, Apple and Google. RIMM's shares, at the current price of $46.02, are down 40.00% since March 29, and off 47.75% from its September 23, 2009, 52-week high of $88.08. The most congested areas in RIMM options today are in September $50 strike calls and October $50 strike calls.