Research in Motion (RIMM, $97.53, up $0.82) reported earnings after the bell and they weren’t pretty. Wall Street was eager to hear the news but punished the stock in after-hours trading when the company missed earnings by a penny. I mentioned on Monday that analysts were looking for revenues of $2.6 billion and earnings-per-share of $0.87. RIMM also missed revenues by $20 million.

We also talked about RIMM’s September numbers which were a little funny but this could have been because consumers are waiting for the arrival of the company’s new Bold smartphone. The company said new subscriptions were 2.6 million, which matched expectations but new devices sold only reached 6.1 million, not the 6.3 million Wall Street was expecting. So maybe consumers were/ are holding out or just buying the iPhone instead.

In after-hours trading as I write this, RIMM is down $18.88 to $78.65. Yikes. I was hesitant to recommend another strangle option trade on RIMM because I thought we would only see a 10% move in the stock either way. We had used the October 120 calls (RULJD, $1.20, down $0.36) and the October 80 puts (RFYVP, $2.06, down $0.54) as a strangle on September 16 and closed both sides of the trade within a week. We made a gain of 40% with that trade. The after-hours drop of 20% for RIMM should hold up to make this trade profitable if you put this strategy on before earnings.

Rick Rouse
Rick@OptionsMentoring.com

Research in Motion (RIMM, $97.84, down $5.60) fell back below $100 on Monday ahead of its scheduled earnings report on Thursday. The stock has been making $10 swings almost on a daily basis which leads me to believe the stock will make a substantial move by the end of the week.

There are some analysts who expect RIMM to post solid quarterly results, with revenues of $2.6 billion and earnings-per-share of $0.87. Although early October’s availability of the company’s 3G Bold and Kickstart have acted as a near-term catalyst, there’s a report out that says RIMM’s September sell-through numbers are looking “slightly disappointing” ahead of the new product launches. This was on top of a “flat” August.

There are too many variables to consider a trade for RIMM, especially with earnings coming out. To me, it is looking as though RIMM’s new products are going to have a bigger impact on the company’s next quarter, not this one.

Worldwide smartphone sales grew nearly 16% in Q2 from a year earlier and smartphones control about 11% of the mobile device market. That’s good news for RIMM because it shows there is still plenty of market share to capture. However, with so many competitors coming into the fray, RIMM will be fighting for that market share with the likes of Apple (AAPL, $131.05, down $9.86) and even Google (GOOG, $430.14, down $19.01).

The stock hit a low of $88 on September 18 which tested multi-year support. I profiled a RIMM strangle option trade earlier this month that netted us a 35%-40% profit. I would almost go out on a limb and recommend the same trade but it’s just too risky. The recent low has me leaning towards RIMM testing those lows again but a good earnings report may help the shares from sinking.

Rick Rouse
Rick@OptionsMentoring.com

As we head to lunch, here’s some tidbits on some of the stocks we are currently following.

On September 2, I did a piece on McDonald’s (MCD, $63.88, up $1.46) saying the company would be reporting great same-store sales. At the time, the stock had lost its hype because the Olympics had finished and Wall Street grew bored with the stock. It was a great time to go long some calls options and that we did. Although these calls doubled shortly after I mentioned them, then traded lower, today is another payday. Same-store sales rose 8% in August.

The September 65 calls (MCDIM, $0.65, up $0.30) are up 86% this morning and could have been bought for 40 cents on 9/2. The October 65 calls (MCDJM, $1.65, up $0.45) are up 38% and were going for $1.25. This is the second time the market is begging you to take profits so manage your positions accordingly.

Research in Motion (RIMM, $104.27, up $1.60) has rebounded nicely and has traded as high as $106 today. Apple (AAPL, $158.40, up $0.48) is introducing new and cheaper iPods in a couple of hours.

Lehman Brothers (LEH, $10.18, down $3.97) hit a low of $8 earlier in the session after buyout talks with the Korea Development Bank have ended. I’ve been hesitant to make an option trade on Lehman but a strangle is looking more and more like a possibility. If you want to pull the trigger on one here is the play. The October 12.50 calls (LYHJV, $2.41, down $1.44) and the October 7.50 puts (LYHVU, $2.34, up $1.55) look like the perfect fit. As sure as the sun will come up tomorrow, you can almost bet Lehman is going to move $5 in either direction by October, if not within the next day or two.

The DryShips (DRYS, $53.30, down $4.12) October 60 puts (DQRVL, $9.70, up $3.20) continue to soar. If you recall, we did a strangle trade on DryShips on August 25. We sold the calls shortly after the trade and the puts were trading for $2.60 at the time. They have more than tripled and are working on a “quad”. As you can see, some of the strangle trades we have been using are providing us with monster returns.

Rick Rouse
Rick@OptionsMentoring.com

Research in Motion (RIMM, $100.90, down $6.05) is trading lower after opening the morning at $111. The volatility has picked up over the past few weeks after the stock made a run from $119 to $135. At the end of July, I mentioned that the company had three new phone models coming out: the BlackBerry Bold, the Kickstart and the Thunder which could move the shares higher.

Over the next couple of weeks the September 140 calls (RULIH, $0.04, down $0.01) went from $1.85 to $5.00 which netted us over a 150% return. I had mentioned that the stock faced serious resistance at $140 and we closed the trade. As you can see, with RIMM’s 35 point drop since our exit on August 8, these calls are now pretty much worthless.

The decline in the share price ahead of these new phones has given us another opportunity to go long. However, we may have to use some protection on the downside to mitigate some of the risk.

The good news is that the company sold 5.6 million smartphones from April through June, which was up from 2.5 million a year ago. This shows that RIMM is capturing more and more market share. For what it’s worth, the stock also got an upgrade this morning out of Morgan Keegan to “Outperform” from “Market Perform”.

I could care less about the upgrade but I do think RIMM is at the point of bouncing higher or breaking serious technical levels. The stock is right at its 200-day moving average and if it falls below $100, there’s a real chance the stock could dip into the $80’s. For this reason we will use some put options to hedge our bets. The September options expire in a few weeks so we will want to use the October options.

The October 120 calls (RULJD, $3.22, down $1.38) traded as high as $6.10 when the stock hit $111 earlier this morning and the October 80 puts (RFYVP, $1.82, up $0.62) hit a low of $1.37 in the process. We will do a two-for-one trade at current levels. This means for every two call options you buy, also buy one put option. If the stock can rebound and trade higher, the loss in the puts will be offset by the gains in the call options. Either way, I think RIMM will easily make another 20 point move higher or lower.

Rick Rouse
Rick@OptionsMentoring.com

Research In Motion (RIMM, $132.14, up $4.89) is having another huge day after touching a low of $116 on Monday. The move can be attributed to a positive note out of Citigroup saying the company is poised for a strong second half of the year with the introduction of the BlackBerry Bold.

On July 31 I mentioned the company’s other products, the Kickstart and the Thunder, will also be hitting the market. These catalysts have propelled the stock higher in the short-term and that was all were we looking for. I profiled the September 140 calls (RULIH, $5.00, up $1.45) at $1.85 and they are up another 40% today. Some of you were stopped out with only an 8% gain but other traders may have stayed in.

The calls are now up 150% from entry levels and with the weekend coming up it would be wise to maybe sell half of the position and set a stop on the other half. There will be a small loss of time premium but that would be offset if RIMM continues higher next week. As far as resistance, the stock is facing headwinds at $140 and it would be a stretch for RIMM to barrel through that and go on to test its 52-week high of $148.

Rick Rouse
Rick@OptionsMentoring.com

Johnson & Johnson (JNJ, $71.13, up $0.68) is setting a new 52-week high today and has been solid since its earnings report. I mentioned good things could be in store for the company and the chance of the stock setting new 52-week highs was a good possibility if earnings were better-than-expected. We were stopped out of the August 65 calls (JNJHM, $6.20, up $0.70) at $3.80 on July 30 after staying in the trade for a couple of weeks because of the volatility. The trade was profiled at $2.30 so the return was 65%. As you can see, although we were stopped out, the calls went on to gain another 50%.

Research In Motion (RIMM, $126.58, up $4.60) is another position that we were whipsawed out of due to the market volatility. I profiled the September 140 calls (RULIH, $3.35, up $1.33) at $1.85 on July 31 and they immediately traded to a high of $2.70 shortly after. We then set a $2.00 stop which took us out of the trade as RIMM plunged below $116 Monday. Although the trade was good for 8% today’s action proves how nimble we have to be to maximize our profits. That’s the difference between 8% and nearly a 100% return. Incredible huh?

Rick Rouse
Rick@OptionsMentoring.com

Research in Motion (RIMM, $141.69, up $8.92) is having a stellar day, hitting an all-time high of $143 earlier in the session. The company unveiled its latest BlackBerry model dubbed, the Bold, which was its first major new model in over a year. The phone is expected to compete directly with Apple’s (AAPL, $188.16, up $4.71) iPhone.

RIMM’s Bold has twice the screen resolution of the company’s current Curve BlackBerry and dual-band Wi-Fi and GPS capabilities should be available from carriers this summer. The May call options have been active in RIMM. The May 140 calls (RULEH, $4.07, up $3.30) have traded over 30,000 contracts and are up 428%, and the May 145 calls (RULEI, $1.77, up $1.52) are up 600% as over 20,000 contracts have traded hands.

The announcement of the Bold came earlier than expected and on the heels of Apple’s news that its online stores in the U.S. and U.K. are sold out of the iPhone. Some stores run by Apple and AT&T (T, $39.11, up $0.52) may still have units available but it’s hit or miss.

The low availability of the iPhones could indicate that the release of a 3G iPhone is just around the corner. Apple has a conference that starts June 9 and we all know Steve Jobs likes to make a splash at such events. Apple sold 1.7 million iPhones in its last quarter and its goal is to sell 10 million iPhones by year-end. Many analysts believe they will easily beat that number.

The release of a new iPhone would help offset sales that Apple is losing now as people anxiously await its release. All three companies (Apple, AT&T, and RIMM) have positioned themselves ahead of the competition and now its up to the rest of them to play catch-up.

Rick Rouse
Rick@OptionsMentoring.com