QCOM Option Activity Put Volume Surges
Anyone know what’s driving the pessimism?
Snips>>>
Option players are snapping up puts on QUALCOMM, Inc. (QCOM: sentiment, chart, options), despite the stock's solid technical performance. On Monday, traders on the International Securities Exchange (ISE) bought to open 4,062 puts on QCOM, compared to just 377 calls. The security's single-day put/call ratio was a rather lopsided 10.77, as bearish bets were nearly 11 times more popular than their bullish counterparts.
short-term option players are more pessimistically aligned toward QCOM now than at any other time during the past year.
>>>>>>>>>>>>>>>>>>>>>>>
Option Activity Alert: Put Volume Surges on QUALCOMM, Inc.
Despite the stock's impressive rally, pessimism is palpable among speculative investors
by Elizabeth Harrow (eharrow@sir-inc.com) 5/5/2009 11:34 AM
Option players are snapping up puts on QUALCOMM, Inc. (QCOM: sentiment, chart, options), despite the stock's solid technical performance. On Monday, traders on the International Securities Exchange (ISE) bought to open 4,062 puts on QCOM, compared to just 377 calls. The security's single-day put/call ratio was a rather lopsided 10.77, as bearish bets were nearly 11 times more popular than their bullish counterparts.
Monday's put-skewed activity continued a recent trend in the tech stock's options pits. QCOM has racked up an ISE 10-day put/call ratio of 1.22, which ranks higher than 87.5% of other such readings taken during the past 52 weeks. In other words, option traders on the ISE have purchased the stock's puts at a faster pace just 13% of the time.
Thanks to the recent influx of pessimistic speculation, the equity's Schaeffer's put/call open interest ratio (SOIR) arrived today at 0.98, marking a new annual high for the indicator. This lofty SOIR reveals that short-term option players are more pessimistically aligned toward QCOM now than at any other time during the past year.
Since April 20, when May-dated options assumed front-month status, near-term put open interest for QCOM has swelled by 47.7%. During the same time frame, comparable call open interest has increased by just 26.2%.
In the May series, put players are focused on the 40 strike. This round-number level boasts peak put open interest of 18,453 contracts, most of which have been added within the past 10 days. Also popular is the May 35 put, which carries a respectable 17,761 contracts in open interest.
Meanwhile, on the call side, peak front-month open interest of 20,818 contracts is located at the 35 strike. While these contracts are in the money by a respectable margin, both of QCOM's heavily populated put strikes are out of the money. This skew toward in-the-money calls and out-of-the-money puts suggests that many speculators are expecting the shares to plunge during the short term, underscoring the downbeat mood among option players.
Elsewhere on Wall Street, short sellers have recently added to their bets on QCOM's decline. Short interest on the shares rose by 1.4% during the most recent reporting period, and now accounts for 2.5% of the stock's float. The rising short-to-float ratio reveals that option players aren't the only group with a bearish bias toward the secure
Judging by this widespread skepticism, you might never guess that QCOM is sitting on a respectable year-to-date gain of 21%. In fact, during the past 60 trading days, the stock has outperformed the broader S&P 500 Index (SPX) by 14 percentage points -- rather impressive, considering the recent bull run in the equities market.
QCOM's short-term uptrend has been underlined by support from its 10-day and 20-day moving averages, which have guided the shares higher since March 10. In the days since, the stock has finished just two days below this double-barreled support.
The equity's positive momentum recently propelled it above resistance from its 50-week moving average, which had previously suppressed QCOM for four consecutive weeks. Now the shares have notched a weekly close above this trendline, and seem poised to do so again this week. During the short term, this moving average could revert to its 2008 role as support.
With key technical support levels firmly in place, it seems premature to call a top to QCOM's rally. As the stock continues to trek higher, bearish bettors will most likely be forced out of their losing bets. A capitulation among pessimistic traders will add even more buying pressure to the uptrending equity, extending its year-to-date gains.
schaeffersresearch.com |
