QCOM Analysis

Qualcomm Inc. (QCOM)

I have entered a short iron fly spread on QCOM, using options that trade for the last time 44 days hence, on Dec. 21. The premium is a $4.44 credit and the stock at the time of entry was priced at $62.61.

I entered the trade because it coincides with an earnings announcement today, Nov. 7, after the closing bell.

The profit zone for this position is between $66.94 on the upside and $59.44 on the downside.

Implied volatility stands at 38%, which is 2.2 times the VIX, a measure of the volatility of the S&P 500 index.

QCOM’s IV stands higher than 57% of its daily readings over the past year — it’s IV rank.

The price used for analysis was $62.69.

Premium: $4.44 Expire OTM
QCOM-iron fly Strike Odds Delta
Long 70.00 89.0% 13
Break-even 66.94 71.0% 32
Short 62.50 53.0% 50
Short 62.50 49.0% 47
Break-even 59.44 65.0% 32
Long 55.00 81.0% 16

The premium is 59.2% of the width of the position’s wings.

The risk/reward ratio is 0.7:1, with risk of $306 per contract and reward of $444 per contract..

The bid/ask spread was 5.7%.

By Tim Bovee, Portland, Oregon, Nov. 7, 2018


Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

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