RIMM Rises With Vol; New Version Means Revival Or Flatline

Research In Motion Limited (RIMM) is a designer, manufacturer and marketer of wireless solutions for the worldwide mobile communications market.

I think by now we all know the RIMM story. Once the highest of highs as the premiere cell phone provider and a stock price in $145 range, to going nearly bankrupt and a stock price nearing $5. It seems though, that the promise of RIMM 10 is more than just promise, but reality. This company may have actually gone from borderline irrelevancy and potential insolvency to very relevant, and primed to rake in some free cash flow. But, lest we forget, if RIMM version 10 is a bust, this might not be a $6 stock, it might just be a memory.

Let's start with the two-year chart, which is actually bad, and then zoom in on he last six-months (which is good).



On the stock side we can see those highs above $70, when in fact in the summer of 2008, the stock was trading above $145. fast forward to this last year, and the 52 wk low for RIMM is $6.22. That's a 96% drop in value -- "hello iPhone."

I posted some articles on RIMM that truly questioned the relevance of the firm. One post in particular on 11-23-2011 is of interest, here.

But let's zoom into the six-month chart for RIMM, below.


We can see the six-month return has seen the stock rise from $6.86 to now over $17.50. It's all in the way you look at things, I guess. As of right now, RIMM's CEO (Thorsten Heins) is garnering praise for his leadership in just a year of his "CEO-ship."

On the vol side we can see the IV30™ has been rising with the stock price and is in fact now in the 84th percentile (annual). So, in a world with VIX at multi-year lows and vol of VIX at multi-year lows, we see a stock rising and vol ripping alongside. In this case, it makes perfect sense. Lest we forget, if RIMM version 10 is a bust, this might not be a $6 stock, it might be a memory.

Finally, let's turn to the Options Tab.

Across the top we can see the monthly vols are priced to 90.315 for Feb and 84.895 for Mar. The next earnings release for RIMM should be after Mar expiry. I'll repeat myself fom a few lines above and the intro: "Lest we forget, if RIMM version 10 is a bust, this might not be a $6 stock, it might be a memory."

Disclosure: This is trade analysis, not a recommendation.

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