QUALCOMM, Inc. (QCOM) Option Bulls Pile On Ahead of Earnings

QUALCOMM, Inc. is scheduled to report earnings the evening of Jan. 28

by Karee Venema

Published on Dec 26, 2014 at 1:14 PM
Updated on Jun 24, 2020 at 10:16 AM

QUALCOMM, Inc. (NASDAQ:QCOM) is trading higher today -- up 1.2% at $75.54 -- following reports that China is close to settling its antitrust investigation on the chipmaker. In the stock's options pits, calls are trading at 1.2 times the average intraday pace, and according to QCOM's 30-day at-the-money implied volatility, which has jumped 11% to 18.6%, short-term contracts are in high demand.

Drilling down, the equity's February 72.50 call has seen the most action, and all signs suggest fresh bullish bets are being initiated here. Based on QCOM's current price, these calls are in the money; however, in order for call buyers to profit at the close on Friday, Feb. 20 -- when back-month options expire -- the stock needs to be sitting north of breakeven at $76.83 (strike plus the volume-weighted average price of $4.33).

From a wider sentiment perspective, today's accelerated call activity is just more of the same. Specifically, the stock's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 2.57 ranks higher than 70% of similar readings taken in the past 52 weeks. Simply stated, calls have been bought to open over puts at a quicker-than-usual clip in recent months.

On the charts, it's been a tough 2014 for QCOM, which is perched 1.7% above its year-to-date breakeven mark. The security's withstanding technical troubles could continue into the new year, with QUALCOMM, Inc. (NASDAQ:QCOM) slated to unveil its fiscal first-quarter earnings report the evening of Wednesday, Jan. 28. Following its last four turns in the earnings confessional, the equity has averaged a single-session post-earnings loss of 4%, including an 8.6% plunge in early November.

Daily Chart of QCOM Since January 2014 With Post-Earnings Drop

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