Pre-Earnings Skepticism Ramps Up on QUALCOMM, Inc. (QCOM)

QUALCOMM, Inc. (NASDAQ:QCOM) hasn't enjoyed a positive post-earnings session in the past eight quarters

by Josh Selway

Published on Apr 19, 2016 at 2:31 PM
Updated on Jun 24, 2020 at 10:16 AM

Tech stock QUALCOMM, Inc. (NASDAQ:QCOM) is scheduled to report fiscal second-quarter earnings after the closing bell on Wednesday. The stock hasn't enjoyed a positive post-earnings session over the past eight quarters, however, including drops of 8.3% and 15.3% in January and November, respectively. Nevertheless, QCOM calls are trading at twice the average intraday pace in today's session. 

Drilling down, QCOM's May 52.50 call is stealing the show, with nearly 13,400 contracts on the tape. (As a point of reference, the next most active strike has seen fewer than 1,200 options traded.) However, data from the International Securities Exchange (ISE) suggests the majority of the activity taking place here is of the sell-to-open variety, meaning traders are betting on $52.50 to act as a short-term ceiling for QCOM through the close on Friday, May 20, when front-month options expire. 

While long calls have been more popular than long puts on an absolute basis during the past two weeks at the ISE, Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), put buying has gained momentum. QCOM's 10-day put/call volume ratio across these exchanges has jumped to 0.73 from 0.51 in the past two weeks, with the current ratio ranking in the 74th percentile of its annual range. 

The stock's Schaeffer's put/call open interest ratio (SOIR) also reveals a put-skewed picture. At 1.10, QCOM's SOIR ranks in the 93rd percentile of its annual range, telling us that traders targeting options that expire within three months have been extremely put-focused. 

Elsewhere, short interest on QCOM is negligible, but there are some skeptics in the analyst community. While 11 brokerage firms rate QCOM a "strong buy," 10 say it's just a "hold," and two others deem it a "strong sell." 

QUALCOMM, Inc. (NASDAQ:QCOM) has been quiet on the charts in 2016, managing a gain of 1.8%. It's more of the same today, with the stock trading within a 63-cent range, last seen at $51.77. And while QCOM has followed the broader stock market higher since its February lows, the shares remain stuck below their 10-month moving average, which has been pushing them lower since late 2014. 

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