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Qualcomm faces large bearish play

Mike Yamamoto (mike.yamamoto@optionmonster.com)

A large downside position is targeting Qualcomm, which has been pulling back since hitting a 13-year resistance level early this month.

A block of 7,415 April 52.50 puts was bought for $0.06 on Friday. This is clearly a new position, as it was well above the open interest of 3,176 contracts in the strike before the session's trading began.

QCOM fell 2.4 percent to $64.97 on Friday, closing below its 50-day moving average for the first time since early November. The semiconductor stock has been falling since hitting a recent high of $68.50 on March 5, a resistance area that goes all the way back to the dot-com meltdown in April 2000.

The puts purchased on Friday, which lock in the price where QCOM can be sold no matter how far it might fall, was not tied to any stock activity identified by our systems during the session. They could have been bought as protection on a long position established earlier or as an outright bearish bet that the shares will plunge below $52.50 in the next five weeks.

That price is just below the stock's 52-week low of $53.09 reached last July. Other names of the chip sector have shown weakness recently after running higher for more than a year, according to our researchLAB analysis tool.

Total option volume in the name was just shy of 71,500 on Friday, double its daily average for the last month.

Disclosure: I own QCOM shares.

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