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QUALCOMM, Inc. (QCOM) Option Bear Makes a Gutsy Gamble

One QUALCOMM, Inc. trader targeted the January 2015 65-strike put today

by 5/9/2014 3:10 PM
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As QUALCOMM, Inc. (NASDAQ:QCOM) has charted a path to decade-plus highs in recent months, option players have been upping the bullish ante. Over the past 50 sessions, the stock has racked up a call/put volume ratio of 2.76 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). What's more, this ratio ranks in the 86th percentile of its annual range, meaning calls have been bought to open over puts at a quicker pace just 14% of the time within the last 12 months.

It's a similar set-up in today's session, with calls having the slight edge over puts. However, one speculator is bucking the withstanding bullish trend, and is either betting on or hedging against a big slide for the tech concern over the long term. Specifically, the top option trade on QCOM today is a block of 2,000 January 2015 65-strike puts, which traded earlier at the ask price of $1.24 each, hinting at buyer-driven activity. Implied volatility edged higher at the transaction, pointing to the initiation of new positions.

The last time QCOM traded south of $65 was last August, and as such, the options market isn't too confident of an in-the-money finish at January options expiration. In fact, delta on the put is docked at negative 0.14. What this metric also implies is that for every dollar QCOM loses over the next nine-plus months, this put will gain $0.14. Conversely, for every dollar QCOM adds, this put will lose $0.14.

On the charts, QUALCOMM has been moving higher since last July, thanks to a lift from its rising 20-week moving average. More recently, though, the stock has taken a breather since notching a 14-year high of $81.66 on April 21, down 3% to $79.24. Given the equity's longer-term uptrend, one possibility is that today's put buying at such a deep out-of-the-money strike could be at the hands of a shareholder picking up some options-related insurance against any longer-term downside.

Off the charts, QUALCOMM, Inc. (NASDAQ:QCOM) announced today it has entered into a "non-binding and non-exclusive" agreement with the Brazilian government to develop high-end semiconductors for smartphones. This deal echoes a similar agreement the duo made in April 2012.


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