Research in Motion shares rise on Microsoft rumor

Research in Motion Ltd shares rose more than 3 percent on Thursday on renewed market speculation that Microsoft Corp could be interested in buying the BlackBerry maker.

“Microsoft has been mentioned as a possible buyer,” said Frederic Ruffy, an analyst at options education firm Optionetics in California.


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“According to speculation, the software giant might be interested in RIM in response to Google’s (GOOG.O) recent announcement that it is interested in making its own mobile phone operating system, which would compete with Windows Mobile,” he added.

RIM shares were up 3.35 percent at $84.59 in midday trading after posting a new high of $85. Some option traders appeared to be betting that the stock’s strength could continue.

“I’ve seen the rumors on RIM and there has been interest in the front-month calls, which allow investors to buy RIM shares at $80 all the way to $93.375 a piece,” said Rebecca Engmann Darst, an equity options analyst at Interactive Brokes Group in Connecticut.

“It is RIM’s standard policy to not comment on rumors or speculation,” a RIM spokeswoman said in an e-mail.

Microsoft was not immediately available for comment.

Among the busiest calls were the September $93.375 series as more than 8,000 lots moved early on Thursday. The odd strike price is due to a recent stock split in RIM, Ruffy said.

“The heavy trading in these out-of-the-money calls seems to reflect speculative call buying on the view the share price will continue moving higher during the next few weeks,” Ruffy said. The September contacts come off the board on Sept 21.

Ruffy said RIM was also one of the market’s favorite momentum names of late. It, along with Apple (AAPL.O), SanDisk (SNDK.O), Crocs (CROX.O) and a handful of others, continue to find buyers during market rallies.

“They have strong price momentum and are viewed as relatively immune from the recent credit market turmoil,” he said. “Today’s strength is a continuation of that pattern. It’s not just takeover speculation driving today’s gains.”

Jon Najarian, co-founder of Web information site optionmonster.com in Chicago, also noted a rise in RIM’s September implied volatility, a measure of the expected magnitude of share price movement conveyed by option prices.

“Early on Thursday, there were rumors about RIM,” he said.

When RIM shares were up 2.25 percent Thursday morning, the at-the-money September implied volatility stood at around 49 percent above its average 44 percent over the past week, he said.

“That indicates there is demand for options but the paper is mixed,” he said. “The stock hit a new 52-week high this morning and the shorts were covering their positions. But we don’t show any panic buying. The options action is interesting but so far not heavy according to our model.”

“One rumor out there is Microsoft would make a run at RIM. But we are not seeing anything that would cause us to believe that this is anything but a rumor,” Najarian said.

Via Yahoo

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