QCOM Analysis

Qualcom Inc. (QCOM)

Update 4/20/2017: QCOM declined after earnings were published but remained well within the zone of profitability. I exited at 45.6% of maximum potential profit.

Shares declined by 1.8% over one day, or a -640% annual rate. The options position produced an 84.0% yield on debit for a +30,649% annual rate.


QCOM publishes earnings on Wednesday after the closing bell.

I shall use the APR monthlies options, which trades for the last time two days hence, on April 21.

Implied volatility stands at 34%, which is 2.4 times the VIX, a measure of the volatility of the S&P 500 index.

QCOM’s IV stands in the 85th percentile of its annual range and at the top of its most recent broad movement.

The price used for analysis was $52.47.

Premium: $2.41 Expire OTM  
QCOM-iron fly Strike Odds Delta
Long 57.00 91.1% 10
Break-even 54.91
Short 52.50 51.45 51
Short 52.50 48.6% 49
Break-even 50.09
Long 48.00 88.6% 10

The premium is 54% of the width of the position’s wings.

The risk/reward ratio is 0.8:1.

Decision for My Account

The stock at the time of entry was priced at $52.50.

By Tim Bovee, Portland, Oregon, April 19, 2017

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