Options are active in shares of RIMM with expiration tomorrow and earnings this evening.  The IB Options Desk writes:

RIMM – Research in Motion Limited – Perhaps memories of the 20% rally in RIMM’s shares following last quarter’s earnings announcement has incited the frenzy of option trading on the stock ahead of its first-quarter earnings scheduled for release after today’s closing bell. Analysts predict that earnings per share will come in at about 94 cents on revenue of $3.5 billion. The pre-earnings excitement has pushed shares higher by less than 1% to $77.88 this afternoon as the stock recovers from losses seen during the last week – we note shares are lower by 10% off an $86.00 peak this time one week ago. Option traders have heavily populated the June contract ahead of expiration tomorrow, with the July contract experiencing high trading volume, as well. There is good two-way action on RIMM options with notable volume in the June 80 and 90 calls, where traders are selling higher strikes to cheapen the cost of a bullish wager on the lower strike. Option implied volatility in the June contract exceeds 225% compare to the overall implied volatility reading on the stock at 70%. This has drawn some premium sellers to the June contract hoping that the swings won’t be so wild this time round. We’re not sure many wars were ever won on hope. Watch out for earnings this evening.

RIMM’s sandbagging talents are second only to Apple’s.  The analysts always peg their estimates in the mid-range of RIMM’s guidance.  This can viewed as either sheer stupidity in the analyst community or monumental stupidity (some would go so far as to say that the analysts are in the pockets of management, but we won’t go so far as to imply that).  The estimate tonight is for earnings of 94 cents on revenues of 3.43B.  I haven’t run a detailed analysis as I did with Apple a few months back, but my back of the napkin math comes up with much higher numbers.  I expect RIMM to report over $1 in EPS on $3.5B in revenues.  The guidance for next quarter looks low as well.  Don’t be shocked to see them straddle the range or guide just above.

Personally, my favorite time for RIMM earnings is just after the market closes.  RIMM tends to wait until 4:15 or 4:30 EST to release the numbers, but there is always a phenomenal amount of manipulation in the shares in the lightly traded after hours market just prior to the press release.  The stock will move anywhere from 1-5% before the news is released and mayhem breaks out (usually to the upside).  It’s always entertaining to watch (though I don’t partake in gambling on stocks).  It’s the closest thing to a craps table as you can find on Wall Street.

Update – Schaeffers Reports:

Digging into today’s options activity, however, I was surprised to find what appears to be a short vertical put spread levied against RIMM. These strategies, also known as credit spreads, require the underlying stock to remain above a certain level through expiration. With the volatility surrounding an earnings report, not to mention options expiration on Friday, this normally neutral-to-bullish trading strategy seems a bit unusual.

The trade was centered on RIMM’s June 75 and 80 puts, with 3,300 contracts trading at the ask price of $3.10 on the June 75 put on the International Securities Exchange (ISE) around 11:09 a.m. Eastern time. As for the June 80 puts, 3,300 contracts changed hands at the same time on the same exchange for the bid price of $5.93. Both blocks were marked “spread.” If you are following RIMM today, you know the shares are trading roughly three points below the 80 strike, thus making this options strategy quite bullish.

Update 2 – At first glance the numbers look pretty much as I expected.  98 cents on the bottom line with 3.42B in revenues.  Gross margins were good and the guidance basically straddles expectations.  The stock is selling off 5% for who knows what reason….

* No position in RIMM or any related securities.