Chart Suggests Qualcomm Stock Could Continue To Slide

Options traders are call-heavy towards QCOM stock

Oct 3, 2017 at 9:40 AM
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Qualcomm (QCOM) has had a rough 2017, with the shares racking up a year-to-date loss of more than 20%. The chip stock's decline accelerated on July 20, when a poorly received profit forecast sent QCOM gapping below the $56 level -- a key price point representing double the equity's 2008 lows. Now, with resistance from QCOM's 40-day moving average directly overhead following a brief period of consolidation, it's an ideal entry point to bet on the stock's bearish momentum to resume.

qcom stock

 

Heavy overhead call open interest could also keep the stock under pressure during the short term. There are more than 80,000 calls open at the October and November 52.50 strikes, representing a formidable source of options-related resistance.

Analyst sentiment remains quite optimistic. Of the 20 brokerages covering QCOM stock, 11 rate the shares a "strong buy." This indicates that there is plenty of room for downgrades to push the stock lower.

From a premium buyer's perspective, QCOM has regularly exceeded the volatility expectations priced into its options over the past year, as indicated by the stock's Schaeffer's Volatility Scorecard (SVS) of 84.

Subscribers to Schaeffer's Weekend Trader Series options recommendation service received this QCOM commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

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