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Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: freeus who wrote (93410)	2/7/2001 10:14:24 AM
From: waverider	Respond to of 152472

Just a look back in history at a wrong timing call based on put/call ratios with QCOM. The guy was dead wrong as we all know QCOM shot up nicely after earnings. Rick Courtesy of Schaeffer's Daily Sentiment Qualcomm (QCOM) Ahead of Earnings 1/25/2001 2:49:30 PM >>>Qualcomm (QCOM – 75-7/8) is scheduled to report first-quarter earnings tonight after the bell. First Call estimates are for QCOM to post earnings of 28 cents a share. We have been observing heavy out-of-the-money call additions over the last couple of days in front of earnings. This is a pretty standard trade. The rational goes, buy calls in front of earnings and subsequently take quick profits when the stock gaps higher after beating estimates. The problem is when a large crowd of traders all have the same expectations. Therefore, this scenario fails to play out. As evidence of the excessive optimism heading into the earnings report, we cite a dramatic drop in the Schaeffer's put/call open interest ratio (SOIR) for QCOM. This reading has dropped from 0.75 to 0.61 since Monday. The graph clearly shows the sharp drop in QCOM's put/call ratio this week. The one-day change in open interest configuration does an even better job of illustrating the heavy increase in total call open interest in front of QCOM's earnings. The following two charts allow you to visualize the rapid increase in optimism. This dramatic increase in call speculation in front of earnings is a classic example of overly optimistic expectations. This is exactly the type of trade that Expectational Analysis® helps you to avoid. When it comes to options trading, one never wants to be following the crowd of call speculators, one wants to be betting against them. - Ron Taylor<<<<