QUALCOMM, Inc. (QCOM) Bears Happy as CEO Sounds Split Alarm

QUALCOMM, Inc. (NASDAQ:QCOM) CEO Derek Aberle said splitting the company in two may not create value

Sep 4, 2015 at 3:09 PM
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Put players have been active in QUALCOMM, Inc.'s (NASDAQ:QCOM) options pits in recent months, per data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). The stock's 50-day put/call volume ratio across these exchanges is 0.58 -- in the 76th annual percentile. Simply stated, puts have been bought to open over calls at a faster-than-usual clip.

Echoing this is QCOM's Schaeffer's put/call open interest ratio (SOIR) of 0.91, which sits higher than 84% of all similar readings taken in the past year. In other words, speculative traders are more put-heavy than usual toward options set to expire in three months or less.

However, it appears put writers have been fairly busy, as well. In fact, over the past 50 sessions at the ISE, CBOE, and PHLX, 4.33 puts have been sold to open for each one that's been purchased.

Based on the equity's 30-day at-the-money implied volatility, now appears to be an opportune time to sell premium on QCOM's front-month options. Specifically, this metric is docked at 31.4% -- just 6 percentage points from a 52-week peak -- meaning near-term options are pricing in relatively lofty volatility expectations.

Technically speaking, it's been a tumultuous year for QCOM, with the shares down 27%. More recently, during the global stock swoon, the stock breached round-number support in the $60 region, and bottomed at a three-year low on Aug. 24. 

Today, the stock is extending this decline, down 2.3% at $54.27, amid broad-market headwinds. Additionally, CEO Derek Aberle warned yesterday that splitting the company in two -- as it is under pressure from Jana Partners to do -- may not be in the best interest of QUALCOMM, Inc. (NASDAQ:QCOM) shareholders.

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