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Qualcomm faces bearish strategy

Chris McKhann (chris.mckhann@optionmonster.com)

A bearish combination trade dominates today's option activity in Qualcomm.

Total option volume in QCOM of 40,000 so far is already twice its daily average, and most of those contracts are in a single trade. optionMONSTER systems show that a trader bought 15,000 August 55 puts for the ask price of $0.50 and sold 15,000 August 67.50 calls for the bid price of $0.31. The volume at each strike was more than 4 times higher than the previous open interest, so these are new positions.

This could be an outright bearish play, looking for QCOM to fall below $55 in coming weeks, but it is more likely a collar to protect a long-stock position. In the latter case, the trader would be willing to accept limited upside in exchange for protection against a fall back to 52-week lows. (See our Education section)

Those lows came last July as QCOM traded down near $53. Shares of the chip maker were up at $68 in early March.

QCOM is trading at $60.92 this morning, rebounding 1.7 percent. Yesterday's close was its lowest of 2013.

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