TORONTO Research in Motion Ltd RIM.TO RIMM.O moved higher on Thursday on renewed market speculation that Microsoft Corp (MSFT.O) 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.
"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 on Nasdaq.
The Waterloo, Ontario-based company's shares regularly move as much as 5 percent in a single session, even in the absence of news. The Microsoft rumor has surfaced in the past, as well as speculation that Motorola MOT.N could buy the Canadian company.
Analysts have heaped upgrades and praise on RIM in recent weeks in wake of strong growth, both in profit and in subscribers.
The company's ubiquitous BlackBerry smartphones have penetrated the professional market, but have yet to gain the same acceptance among retail consumers.
To change this, RIM has been loading up its devices with multimedia features like music players and cameras. It has also worked with carriers to make them more affordable to individuals.
The push into consumer markets could put RIM on a collision course with Apple Inc's (AAPL.O) iPhone. The competition could grow stiffer still if Google launches its own device.
Some option traders appeared to be betting that RIM shares' 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 apiece," said Rebecca Engmann Darst, an equity options analyst at Interactive Brokers Group.
Both RIM and Microsoft declined comment.
"It is RIM's standard policy to not comment on rumors or speculation," a RIM spokeswoman said in an e-mail. A Microsoft spokesperson echoed the statement.
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 September 21.
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.
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."