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Option Brief: QUALCOMM, Inc. (NASDAQ:QCOM) -- which is under investigation by anti-monopoly regulators in China -- has pulled back from its near-14-year high of $76.75 tagged a week ago, with the shares closing at $75.77 yesterday. What's more, some option traders are rolling the dice on an extended decline for the tech giant in the short term.
During yesterday's session, QCOM saw roughly 18,000 puts change hands -- a slight mark-up to its average daily volume. Attracting notable attention was the weekly 2/28 75-strike put, where more than 3,500 contracts crossed, primarily at the ask price. Plus, open interest at the strike skyrocketed overnight, and the International Securities Exchange (ISE) confirms that a healthy portion of the volume was of the buy-to-open variety.
By purchasing the puts to open, the speculators expect QUALCOMM, Inc. (NASDAQ:QCOM) to retreat beneath the $75 level over the next several sessions. However, should the stock remain north of the strike through options expiration next Friday, Feb. 28, the most the investors will lose is the initial premium paid for the puts. Currently, QCOM's short-term contracts are trading at a relative discount to historical levels, as the stock's Schaeffer's Volatility Index (SVI) of 15% stands just 15 percentage points from an annual low.