Most Active Options Update: QUALCOMM, Inc. (QCOM)

QUALCOMM, Inc. calls are hot as the stock flirts with $70

Nov 12, 2014 at 2:35 PM
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The 20 stocks listed in the table below have attracted the highest total options volume during the past 10 trading days. Names highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. One name of notable interest today is tech concern QUALCOMM, Inc. (NASDAQ:QCOM), which is garnering attention from option bulls.

Most Active Options Table

A week ahead of its analyst day, QUALCOMM, Inc. is up 0.6% at $70.08, as rival NVIDIA Corporation (NASDAQ:NVDA) slumps on a heated patent battle with Samsung. From a longer-term perspective, the shares of QCOM remain 5.5% lower year-to-date, and have shed more than 10.6% in November, due to a significant post-earnings bear gap. As a result, the equity's 14-day Relative Strength Index (RSI) sits at 32 -- on the cusp of oversold territory, suggesting a short-term rebound may have been in the cards.

In the options pits, QCOM calls are trading at a 45% mark-up to average intraday levels, and outnumber puts by a margin of roughly 5-to-1. Digging deeper, bulls have taken a shine to the at-the-money 70 strike, buying to open calls in the January 2015 and April series.

The volume-weighted average price (VWAP) of the January-dated calls is $2.16, meaning the buyers will profit if QCOM climbs back atop $72.16 (strike plus VWAP) by the close on Friday, Jan. 16, when back-month options expire. Due to their added time value, the VWAP of the April 70 calls is $3.91, making breakeven $73.91 for the buyers. Profit potential is theoretically unlimited north of breakeven, while risk is capped at the initial premium paid, should QCOM backpedal beneath the round-number $70 level.

Expanding our sentiment scope reveals that today's affinity for QUALCOMM, Inc. (NASDAQ:QCOM) calls is just more of the same. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 10-day call/put volume ratio of 3.05 stands higher than 80% of all other readings from the past year, hinting at a healthier-than-usual appetite for long calls over puts of late.


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