RIM Earnings Announcement after Market Close

For once, I’m sticking to my short-term trading rule to avoid holding stocks across an earnings announcement. With Research in Motion (RIM on the TSX and RIMM on the Nasdaq) due to report earnings after market close today, it is time for me to trade something else.

Yesterday, I took RIM off my watch-list and stopped looking at the stock. Yesterday was a market rise day so I could have traded RIM but chose not to take the risk. In the past, I have day-traded RIM near earnings announcement time only to be caught holding the stock because I was unwilling to take the loss and held past earnings. And the last time that happened, I took a big hit with RIM tanking after earnings announcement.

Options trading in RIMM was heavy yesterday. If one is to speculate and take the risk, options trading is a good vehicle as it allows trading with limited loss potential. Strict adherence to stop loss on the stock is another way to contain the loss.

All the signs were there to day-trade RIM yesterday with the market rise and the increased options trading volume. The stock closed Wednesday's regular session up some 6%. However, I resisted and I will do the same today. Even if the market responds well to the earnings announcement and RIM takes a pop after today, my risk-reward management decision stands.

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