Markets

How bears are playing Qualcomm

(The following is an example of notable trading cited on optionMONSTER's InsideOptions Pro service yesterday.)

Qualcomm has been struggling, and yesterday the bears piled on.

optionMONSTER's Depth Charge tracking program detected the purchase of more than 6,000 Weekly 53 puts expiring next Friday Oct. 9 for $1.08 to $1.14. Volume dwarfed open interest of 41 contracts, which means new money was put to work.

Puts make money to the downside because they lock in the price where investors can sell shares. They can be used to speculate on a drop and can generate significant leverage on a percentage basis owing to their cheap cost. Yesterday's contracts, for instance, gained about 25 percent by the closing bell. (See our Education section)

QCOM ended the session down 1.28 percent to $52.54 and has been unable to break above its 10-day moving average since early August. The semiconductor company is back to its lowest levels since late 2012 after issuing repeatedly weak guidance. Revenues also missed estimates the last time quarterly results came out on July 22.

Overall volume was twice the daily average in the session, with puts accounting for a bearish 60 percent of the total.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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