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Research In Motion (NASDAQ:RIMM) Defies the Bears

Despite outperforming the broader equities market, RIMM remains plagued by pessimism

by 12/28/2012 10:48 AM
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The shares of Research In Motion Limited (USA) (NASDAQ:RIMM – 12.08) have nearly doubled since touching a multi-year low of $6.22 in September, yet the options crowd remains skeptical of the BlackBerry maker. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 10-day put/call volume ratio of 1.01 stands higher than 85% of all other readings of the past year, suggesting traders are buying RIMM puts over calls at a much faster-than-usual pace.

In the front-month series, investors have taken a shine to the January 2013 13-strike put, which saw open interest skyrocket by roughly 14,000 contracts during the past couple of weeks. In near parity, the February 13 put has seen more than 14,000 contracts added during the same timeframe. But, while the February 13 strike is now home to peak put open interest in the back-month series, with more than 16,400 contracts in residence, the out-of-the-money 10 strike remains home to peak put open interest in the January 2013 series, with nearly 32,000 contracts outstanding.

However, that skepticism isn't limited to the options arena. Despite outperforming the broader S&P 500 Index (SPX) by more than 52 percentage points during the past 60 sessions, the smartphone concern has yet to sway the analyst club. In fact, not one of the 32 analysts following RIMM considers it worthy of a "buy" or better endorsement. A round of upgrades could add fuel to the equity's fire.

Likewise, short interest soared 14.8% during the past month, and now accounts for a healthy 24.7% of RIMM's total available float. Should the stock extend its rebound, a short-squeeze situation could also translate into a contrarian boon for RIMM.

At last check, the shares of RIMM are flying in the face of broad-market headwinds, tacking on 2.7% to wink at the $12.08 level. Bolstering the stock was news that it sold its cloud services unit, NewBay, to software maker Synchronoss Technologies, Inc. (NASDAQ:SNCR) for $55.5 million in cash.


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