Whale Trader Pegs QCOM at $71

Qualcomm QCOM – NASDAQ

Thursday, July 20, 2017

After beating earnings expectations on both top and bottom lines, Qualcomm QCOM – NASDAQ fell 5% today. Why? Management lowered fourth quarter guidance — a forecast the market detests.

However, a sharp trader who views this as a buying opportunity is putting his money where his mouth is with the purchase of 50,000 QCOM June 70 calls.

QCOM

Even for a stock like QCOM that trades over 20,000 call options per day on average, this is a monster order. At $1.05 per contract, the cash outlay amounts to $5.25 million.

Given the break-even price of $71.05, QCOM needs to increase some 31.6% for this trade to pay off by expiration. Doing so seems a lot more likely for a tech startup than a giant with a market cap of nearly $84 billion, but perhaps this trader knows something the public doesn’t. If QCOM can pull it off, the reward is quite lucrative at $5 million for every dollar QCOM rises above this lofty threshold.

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