Stocks quoted in this article:
QUALCOMM, Inc. (NASDAQ:QCOM) shares were pressured lower by broad-market headwinds on Friday, finishing 1.6% south of breakeven. Not surprisingly, puts were the options of choice among traders, running at double the average daily pace, and outstripping the number of calls exchanged. What's more, the networking name's 30-day at-the-money implied volatility rose 6.2% to 19.1%, indicating elevated demand for short-term options.
QCOM's most active strike was the September 65 put, and almost all of the volume here crossed as a multi-exchange sweep of 3,500 contracts -- at an ask price of $0.31 each, for a total cash outlay of $108,500 (premium paid * number of contracts * 100 shares per contract). Open interest at the strike also soared over the weekend, making it safe to assume new bearish bets were initiated on QCOM.
Friday's put buyer will profit at expiration if the stock is sitting below breakeven at $64.69 (strike less the premium paid) -- territory not explored in more than a year. Gains will accrue on a move all the way down to zero, while the trader will part with no more than the initial cash outlay, should QUALCOMM, Inc. (NASDAQ:QCOM) be sitting above the strike at the close on Friday, Sept. 19 -- when the back-month options expire. At last check, the shares were up 0.9% to hover near $73.17.