Shares of wireless communication giant Qualcomm (QCOM) have been on a long-term surge over the past few years, although shares have been dropping with the overall market more recently. However, one trader sees the potential for a rebound in the coming weeks.
That’s based on the March $175 calls. With 29 days until expiration, 2,828 contracts traded compared to an open interest of 171, for a 17-fold jump in volume. The buyer of the calls paid $5.30 to make the trade.
Shares last traded near $168, so they’d need to rise just over $7, or about 5 percent, to move in-the-money.
The stock is still up about 22 percent over the past year, beating the S&P 500 by about 10 points. Thanks to strong growth, shares trade at just under 15 times earnings. Shares are still off about 14 percent form their all-time highs.
Action to take: Investors may like shares here, as the stock is a dividend growth play, with a starting yield of 1.6 percent. With earnings and revenue up double-digits over the past year and the 5G rollout continuing, shares look set to perform better than the overall market in the coming months.
For traders, the March $175 calls are an inexpensive play for a rebound in shares in the coming few weeks. Traders can likely nab mid double-digit gains in the next few weeks before the options expire.
Disclosure: The author of this article has a position in the company mentioned here, and may further trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.