How to Play RIM Earnings Today

Technology earnings kick into gear tonight, with Research in Motion [RIM:TSE][RIMM:NSDQ], makers of Blackberry smart phones, reporting results after the bell. According to analyst estimates, RIM is expected to earn $1.28 US in their 2010 Q4(RIM reports in US dollars although is a CDN corporation). Last year, they blew out estimates. Christmas season seems to be a very profitable one, but has the stock's recent gains and upgrades already priced in a predicted beat? In the US, the stock has risen from $60 to almost $75. Now, to be fair, about $10 of that move was foreign exchange related, as the Canadian dollar strengthened against the US dollar. But where do I think RIM will go after-hours? I do not see it moving up more than the $80 calls are worth. Apple and Google have taken market share, and reports shown in the last week indicate that Blackberry users are willing to give up their "BB" in exchange for the iPhone or Android. It looks like we could see a sell on news kind of day for RIM. The options are pricing in a move of about 4 per cent. Normally, I would short both the call and the put the day before earnings to capture the volatility of earnings. The 75 calls and puts are about $3.50 each. A short straddle could pay you $7.00 ($700 each). All the stock has to do is move less than 8 per cent this afternoon and you will be raking in the dough. If you don't want to waste commissions on closing one side of the leg, consider writing the 80 call and 70 put, which I think is a better trade anyways. They are both about $1.65 ($330). You are covered more on this trade and you are only sacrificing half the potential profits. So as long as the stock remains between $70-$80 by April 16, you can buy me a nice steak dinner.