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Despite QUALCOMM, Inc.'s (NASDAQ:QCOM - 64.55) pullback in today's session, calls are easily outpacing their put counterparts. Around 11,000 calls have crossed the tape at last check, compared to roughly 4,900 puts. Short-term speculators are scooping up QCOM's February 65 call, which has seen nearly 1,800 contracts trade. The majority of these have gone off at the ask price, and implied volatility has ticked higher, indicating the initiation of new positions.
By buying these out-the-money calls to open for a volume-weighted average price (VWAP) of $1.73, traders will begin to profit with each step north of $66.73 (strike price plus VWAP) the stock takes through the close on Friday, Feb. 15, when these options expire. This breakeven mark represents a 3.4% premium to the equity's current perch.
It's just business as usual in the options pits today, though, as traders have displayed a distinct preference for calls over puts on QCOM in recent weeks. During the past 10 sessions, traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open more than four calls for every put. What's more, this call/put volume ratio of 4.15 ranks just two percentage points from a 52-week peak, implying calls have been accumulated over puts at a near annual-high clip.
This rush toward calls is a bit puzzling, given the stock has only added a modest 4.3% in 2013. However, the telecommunications concern is slated to take its turn in the earnings confessional after the market closes on Wednesday, Jan. 30. The company's strong quarterly showing in early November sent the shares surging roughly 4.3% the following day, and today's optimistic option players could be hoping that history repeats itself. For QCOM's fiscal first quarter, Wall Street is calling for a profit of $1.12 per share.
As mentioned, the stock is down in today's session. At last check, QCOM had dropped 0.9% to hover near $64.55.