The implied volatility on Research in Motion (RIMM) is through the roof! What a great time to sell some options. However, I don’t want to go naked so I’m considering some OTM covered calls that expire this week after buying some stock and just hoping they expire worthless. Or, if they get exercised then so be it, I still get to pocket my credit from selling these crazy-expensive options here. Earnings come out Thursday, options expire on Friday.

The question I should ask, as any good trader would, is “how much can I lose?” Well, my Optionetics pals don’t look on covered calls too well because they have unlimited risk (the stock has no downside protection). I can remove the unlimited risk by using a collar instead but then I have to put up extra money to buy the put to protect the downside.

I guess I’m not too worried about RIMM going to $0 anytime soon or to anything close to that and feel OK just placing a nice stop loss in case it goes south.