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Call players are targeting QUALCOMM, Inc.'s (NASDAQ:QCOM - 66.24) in-the-money 65 strike in today's session, with traders honing in on the stock's March- and April-dated series of options. Roughly 1,600 contracts have crossed at QCOM's March 65 call, while nearly 2,000 contracts have changed hands at the April 65 call. The majority at each strike has gone off at the ask price, and implied volatility was last seen higher, indicating buy-to-open activity.
By purchasing the March 65 calls for a volume-weighted average price (VWAP) of $2.53, QCOM must rise 1.9% above its current perch to topple breakeven at $67.53 (strike price plus VWAP) by the close on Friday, March 15, when back-month options expire. Breakeven for the further-dated April 65 calls is $68.06 (strike plus VWAP of $3.06), meaning the stock must rise 2.7% above present levels by the sound of the closing bell on Friday, April 19, in order for the options to be profitable. Should QCOM stay south of these marks through their respective expiration dates, the most today's call buyers have risked is the initial premium paid.
A wider sentiment standpoint reveals that calls have been a popular choice among option players of late. During the course of 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 101,702 calls, compared to 21,285 puts. The resultant call/put volume ratio of 4.78 ranks higher than 97% of other such readings, suggesting bullish bets have been placed over bearish at a near annual-high clip in recent weeks.
On the charts, QCOM has been in a steady uptrend over the past four months, with the stock up 15.6% from its most recent low of $57.29, which was tagged on Oct. 25. However, the equity's recent advance has been stunted near the $67 area, which proved resistant in late April.
In today's session, the equity is following the broad markets into the red, and was last seen 1.4% lower. With the stock's Relative Strength Index (RSI) of 65 teetering near overbought territory, a near-term consolidation may have been in the works.