Put Buyers Pounce as QUALCOMM, Inc. (QCOM) Gets Smacked

QUALCOMM, Inc. (QCOM) is following its fellow tech peers into the red today

by Karee Venema

Published on Mar 26, 2015 at 10:43 AM
Updated on Apr 20, 2015 at 5:32 PM

QUALCOMM, Inc. (NASDAQ:QCOM) is feeling the heat in today's trading, as tech names continue to sell-off. At last check, the shares were down 1.3% at $66.34 -- despite BMO upping its price target to $86 from $85 -- widening their week-to-date deficit to 5.3%. Options traders are responding in kind, scooping up puts at a rate two times the average intraday pace, with a number of speculators calling for more downside through tomorrow's close.

Specifically, QCOM's weekly 3/27 66-strike put has seen the most action, and it seems safe to assume new positions are being purchased here -- a theory echoed by data from the International Securities Exchange (ISE). By buying the puts to open, traders expect the stock breach $66 by tomorrow's close, when the weekly series expires. Earlier, the security bottomed out at an intraday low of $65.68.

Outside of the options pits, sentiment is more optimistic. For starters, although short interest jumped 20.3% in the last two reporting periods, it accounts for just 1.2% of the equity's available float. This leaves little in the way of sideline cash available to help fuel any future rally attempts.

Elsewhere, more than two-thirds of covering analysts maintain a "buy" or better rating toward QUALCOMM, Inc. (NASDAQ:QCOM), with not a single "sell" to be found. Plus, the consensus 12-month price target of $76.88 stands at a 16% premium to current trading levels. Should the shares extend their downward trajectory, a continued rise in short selling and/or an unwinding of optimism among the brokerage bunch could translate into a fresh wave of selling pressure.


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