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Bull looks for reversal in Qualcomm

Mike Yamamoto (mike.yamamoto@optionmonster.com)

A large trade is looking for Qualcomm to reverse its recent slump.

optionMONSTER's tracking systems show that a trader bought 8,969 August 65 calls for $1.28 and sold the same number of August 57.50 puts for $0.98. The volume was above the previous open interest at each strike, indicating that this is a new combination trade.

Premiums will rise in long calls and the puts that were sold will lose value if the stock gains, but the opposite will occur if the shares drop. The trader is looking for QCOM to rally above $65 by expiration in mid-August but will be on the hook to buy shares if they fall below $57.50. (See our Education section)

QCOM is down 1.75 percent to $61.87 in morning trading. The chip maker had run from below $62 to above $66 from early to mid-May but has steadily declined since then. The company is scheduled to release its next quarterly results on July 24.

Total option volume in the name so far today is already more than 1.6 times higher than its daily average.

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