RIMM Covered Write

We have done a covered write in Research in Motion. We bought the stock at $68.26 a share and sold the October 70 calls against the stock at $1.92 a contract.

If RIMM is unchanged at October expiration (not likely given this stocks volatility) we would get a return of about 2.89% (annualized gain of about 70%) to hold the position for 12 days. If the options are exercised (which of course means that RIMM has risen in price), we would achieve a return of about 5% to hold the position for 12 days.

Of course therre is some real risk here as RIMM is very volatile and could drop in price from here. However, the stock is down about 21% in the past three days and is right above its 200 day moving average line. There is also some support from a congestion area in the stock back in July.

This trade will no doubt keep me interested over the next few weeks. We will see how it plays out.