Bears Pounce On Struggling QUALCOMM, Inc. (QCOM)

QUALCOMM, Inc. (QCOM) is seeing a rare rush of put buying today

Digital Content Group
Mar 11, 2015 at 2:27 PM
facebook twitter linkedin

Despite receiving a price-target hike to $78 from Exane BNP Paribas, QUALCOMM, Inc. (NASDAQ:QCOM) is sitting 1.9% lower following reports that competitor Intel Corporation (NASDAQ:INTC) will supply Apple Inc. (NASDAQ:AAPL) iPhones with modem chips starting next year -- replacing QCOM. Amid these developments, intraday put volume on the San Diego-based firm has ramped up to nearly quadruple the average amount.

Digging deeper, short-term options traders are active, as half of the stock's 10 most active contracts expire at week's end. Taking the top position is the weekly 3/13 71-strike put, and data suggests some buy-to-open activity is transpiring. By scooping up these puts, the traders are betting QCOM will extend its drop south of $71 through Friday's close, when the series expires. At last check, the shares were perched at $70.53.

This bearish betting stands in stark contrast to what we've observed lately. Specifically, QCOM's 10-day call/put volume ratio across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) is 4.02 -- with calls quadrupling puts. What's more, this ratio outstrips 89% of similar readings from the previous 12 months.

However, put buying makes sense in light of QUALCOMM, Inc.'s (NASDAQ:QCOM) long-term history on the charts. Since topping out at $81.97 in late July, the shares have skidded 14%. A capitulation among option bulls could also exacerbate selling pressure.

Daily Chart of QCOM since July 2014


Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 


300x250 - Banner 3 - v1