Did you get your fill?
Yes, sold 20 contracts jan01/qcom puts at 4 1/2. I like this option play better than buying calls for a 5 month play. The premium received is juicy enough, and yet the risk is rather limited. Thank you for alerting. I would not have looked into it if I did not come across your post!!
Even with the contract signed with a Taiwanese companies, I believe that QCOM will stay in a trading range for several months to come. If you have been a QCOM followers from several years ago, you will recall that QCOM was in a trading range for quite a while: you could have bought QCOM in the 40's (pre- 8 to 1 split) and sold it in the 50's, buy it back in the 40's and sold it again in the 50's. You could have done it over and over. It was quite predictable at that time until that Ericson deal was concluded in early 1999. If this profit is incorporated into the cost basis, then, my cost basis for QCOM is way negative.
Ultimately, it seems that WCDMA will be the standard that is universally adopted. It is not the best since there is CMDA2000. In the negotiation of give and take QCOM will have no choice but to accept that. Afterall, QCOM will receive the same royalties, and has ASIC ready for that. Nokia and Ericson have acknowledged that the future is CDMA, but they want to be recognized as well by selecting the flavor. In the end everyone wins with each party collects royalties. There is no question that QCOM portion will be the largest since WCDMA cannot exists without QCOM, while the other way around is possible considering there is CDMA2000.
Since WCDMA is not ready for some time to come, royalties from WCDMA will not be in QCOM coffers until that time. Therefore, the supergrowth of QCOM will have to wait until then. In the mean time QCOM continues to receive the royalties from the current and new subscribers. QCOM is profitable, and will remain so, but the spike in earnings will be after of WCDMA. Nevertheless, I think it is safe to expect that the current profit level should support the stock price AT LEAST 40.
Considering the above scenario, I prefer to selling OTM puts options as opposed to buying near term calls.
Good Luck to you.
Paul |
