A large option trade is betting on limited upside in Qualcomm ahead of the chip maker's earnings release tomorrow morning.
QCOM was down 1.1 percent to close yesterday at $54.36. The stock, which has been trending lower from a 52-week high just shy of $69 in March, on Thursday posted a 2012 low of $53.11.
Topping brisk option activity in the name yesterday was a single trade in the August 60 calls, according to optionMONSTER's systems. A trader sold 10,000 of them for the bid price of $0.35, just above the previous open interest, so it was a new position.
The call selling is a bet that QCOM won't be much above $60 at expiration in mid-August. It is also reflects a belief that the implied volatility of those calls is overpriced going into the quarterly report, which is not uncommon. (See our Education section)
The implied volatility of those calls was 30 percent. The 10-day historical volatility for the stock is just 19 percent, while the 20-day reading is 26 percent.
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