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Most Active Options Update: QUALCOMM, Inc. (QCOM)

One QCOM option trader thinks another decade-plus high is on the horizon

by 11/14/2013 2:35 PM
Stocks quoted in this article:

The 20 stocks listed in the table below have attracted the highest total options volume during the past 10 trading days. Names highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. Three names of notable interest this afternoon are QUALCOMM, Inc. (NASDAQ:QCOM), Cisco Systems, Inc. (NASDAQ:CSCO), and Microsoft Corporation (NASDAQ:MSFT).

Cisco Systems, Inc. is trading decidedly lower today, following last night's downbeat quarterly earnings report, dreary forecast, and subsequent round of bearish brokerage notes. As a result, the stock was relegated to the short-sale restricted list, causing put activity to soar to almost 10 times the average intraday volume. Elsewhere, amid rumors that Microsoft Corporation may have tapped its next CEO, one shareholder appears to be using February 2014 calls to initiate a stock-replacement strategy. Finally, here's a closer look at where one QUALCOMM, Inc. trader sees the equity progressing to in the near term.


QUALCOMM, Inc. (NASDAQ:QCOM) soared to a 13-year peak of $71.48 today, despite reports that Tiger Global dissolved its stake in the tech concern. Although the stock was last seen lingering around $71.14, one option trader thinks the security can muscle its way to another decade-plus peak in the near term.

Overall call volume in Qualcomm's options pits has doubled the expected intraday pace, and one of the most sought-after positions is the weekly 11/22 71-strike call. More than 6,000 contracts have changed hands here, including one large lot of 3,530. The block trade went off above the ask price for $0.66, implied volatility rose 2.6 percentage points at the time of the trade, and volume has outstripped open interest. Summing it all up, it appears a fresh batch of bullish bets was initiated. Based on the entry price, breakeven for the trade is $71.66 (strike plus premium paid), or territory not traversed by QCOM since April 2000.

Widening the sentiment scope reveals that today's accelerated call activity is just more of the same. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), QUALCOMM, Inc.'s (NASDAQ:QCOM) 10-day call/put volume ratio of 4.93 ranks in the 97th percentile of its annual range. In other words, calls have been bought to open with more rapidity only 3% of the time within the past year.


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