Stocks quoted in this article:
QUALCOMM, Inc. (NASDAQ:QCOM) is following the broader market path lower today, shedding about 1.2% to hover at $66.13. This negative price action hasn't been lost on bearish bettors, as approximately 12,000 puts have switched hands thus far -- a 49% mark-up over the stock's expected intraday volume, and running counter to last Tuesday's bullishly skewed activity.
Leading the pack is the September 60 strike, where more than 3,300 puts have been exchanged -- all of them at the ask price, suggesting they were bought. Meanwhile, implied volatility has ticked higher, and data from the International Securities Exchange (ISE) shows that at least some of the volume at this strike is of the buy-to-open variety.
Since these out-of-the-money puts crossed at a volume-weighted average price (VWAP) of $0.09, the traders will profit with each step QCOM takes below breakeven at $59.91 (strike price less the VWAP) between now and front-month expiration. This denotes a drop of 9.4% from the stock's present perch, as well as a level not breached on an intraday basis since July 10.
The delta for this option is currently docked at negative 0.061, implying it has just over a 6% chance of moving into the money ahead of the close on Sept. 20. Still, even if the tech concern stays above the strike price throughout the put's lifetime, the most today's buyers stand to lose is the net debit paid. Also of note, the security's Schaeffer's Volatility Index (SVI) of 16% ranks lower than all but 5% of similar readings taken during the past 12 months, indicating QCOM's near-term options are relatively inexpensive at the moment.
On the technical front, QUALCOMM, Inc. (NASDAQ:QCOM) has added a modest 7% year-to-date, but has gained considerable ground over the past few weeks. In fact, the shares have recovered 12% since touching a 2013 low of $59.02 on July 9.