1QCOM trade ideas
THE WEEK AHEAD: (WHAT'S LEFT OF IT) -- XLK, QQQ SETUPSWith this holiday foreshortened trading week, premium selling pickings remain slim. The vast majority of underlyings with 52-week >70 implied volatility rank are in stocks that are ramping up for earnings -- e.g., QCOM (71) with earnings in 15, MSFT (79) (16 days), AAPL (75) (21). In that case, you might as well wait to look at those closer to announcement to see whether they are worth a play, rather than diving in here and falling victim to volatility expansion.
On the non-earnings front, two broad sector or index exchange-traded funds stick out -- XLK and QQQ, with the former having a 52-week implied volatility rank of 67 and background implied volatility of 19; the latter, rank -- 65, background -- 20.
Possible XLK Setups
Aug 18th 52/57 short strangle
Max Profit: $106 at the mid
Max Loss/Buying Power Effect: Undefined
Break Evens: ~ 1 SD, both sides
Theta: 1.99
Delta: 7.87
Aug 18th 54 short straddle
Max Profit: $281 at the mid
Max Loss/Buying Power Effect: Undefined
Break Evens: Between expected and 1 SD put side, at expected call side
Theta: 2.79
Delta: -10.71
Aug 18th 50/54/55/58 "near" iron fly
Max Profit: $203 at the mid
Max Loss/Buying Power Effect: $197
Break Evens: ~ Expected, both sides
Theta: 1.35
Delta: -3.45
Notes: I excluded the 20 delta iron condor because it just didn't look "worth it." The "near" iron fly I widened to put a strike between the put and call sides to get break evens around the expected move.
Possible QQQ Setups
Aug 18th 126/129/142/144 iron condor
Max Profit: $86 at the mid
Max Loss/Buying Power Effect: $214
Break Evens: Between expected and 1 SD put side, expected on call side
Theta: 1.22
Delta: -1.72
Aug 18th 129/142 short strangle
Max Profit: $219
Max Loss/Buying Power Effect: Undefined
Break Evens: 1 SD put side, between expected and 1 SD, call
Theta: 5.57
Delta: .70
QCOM- Long 4 NowPrice action has hit 50% of fib. ret $55.00, believe that call options a few 2-3 months out will be play related to price action filling noted gap in price. Also, earnings will be this coming 7/19/17, which I expect to be positive. Please do your own homework, look at support/resistance, trends and reversal candlestick patterns like harami, engulfing or pinbar to trade. Noted on chart at this time is a two candlestick Harami pattern, which is one of best reversal ones to know.
QCOM- Bullish or Bearish? Next Week Trade?Qualcomm's- 0% decline since the beginning of the year was disappointing, especially when compared to the Philadelphia Semiconductor Index's gain of more than 20% during the same period. Many investors have since turned bearish on the stock, due to the seemingly endless barrage of bad news and weak growth forecasts for the year. There are certainly reasons to sell Qualcomm after its lackluster performance, but I believe that investors shouldn't do so based on the following three bear cases.
1) The headwinds facing its mobile business
However, the bears often ignore two key facts. First, Qualcomm's top-tier Snapdragon SoCs are still considered the industry standard for mobile chipsets. That's why flagship devices like Samsung's Galaxy S8 and Sony's Xperia XZ Premium both use its high-end Snapdragon 835 processor. Second, Qualcomm is expanding its Snapdragon lineup to adjacent markets -- including drones, connected cars, action cameras, wearables, Internet of Things (IoT) gadgets, and data centers. These variant Snapdragon chipsets should gradually diversify Qualcomm's chipmaking business away from smartphones over the next few years.
2) Its ugly battles with regulators and other tech companies
3) FEAR of the NXPI deal not closing- TODAY: 6/9/2017, look for news. Europe should approve deal today.
Qualcomm still faces plenty of near-term headwinds, but stock's low valuation and high dividend should limit its downside potential. The stock trades at 20 times earnings, which is lower than the industry average of 26 for semiconductor companies. Its 3.7% dividend yield is much higher than S&P 500's average yield of 2%. As an investor, Qualcomm has tested my patience many times before. But to sell the stock on negative news without regard for the NXP deal, its low valuation, and its dividend would be foolish. So for now, the best move for Qualcomm investors is to simply sit tight and wait for the NXP deal to close.
From: The Motley Fool/Leo Sun/June 7, 2017
Potential Bullish Head and Shoulders, Heading Down FirstQualcomm has been potentially forming a well-known technical trading indicator called a head and shoulders (HnS) pattern. This pattern is basically made up of three peaks or triangles with the middle triangle have a higher top than the ones flanked on each side. A HnS pattern with the peaks on top is bearish as the stock drops upon the final triangle (or shoulder) taking shape. A bullish HnS is the opposite where the peaks are actually valleys. Upon the final shoulder being created, the stock goes up. I have outlined the case below on the currently forming bullish HnS pattern.
When we take a look at other technical indicators, the relative strength index (RSI) is at 75.1524. RSI tends to determine trends, overbought and oversold levels as well as likelihood of price swings. I personally use anything above 75 as overbought and anything under 25 as oversold. Currently the RSI is overbought and due to drop. The stock should drop with this. A drop will begin the formation of the final shoulder in the HnS pattern.
The true strength index (TSI) is currently -0.4758. The TSI determines overbought/oversold levels and/or current trend. I solely use this as an indicator of trend as overbought and oversold levels vary. The TSI is double smoothed in its calculation and is a great indicator of upward and downward movement. The current reading declares the stock has been moving up, but it is near the levels of reversal that occurred at the initial forming of this HnS. This further aids in a potential indicator of near-term downward movement.
The positive vortex indicator (VI) is at 1.3659 and the negative is at 0.5682. When the positive level is higher than 1 and higher than the negative indicator, the overall price action is moving upward. When the negative level is higher than 1 and higher than the positive indicator, the overall price action is moving downward. Currently both indicators are at extreme levels which typically lead to a reversal of the stock. This is the third indication of near-term downward movement for the stock.
The stochastic oscillator K value is 84.6919 and D value is 85.7988. This is a cyclical oscillator that is highly accurate and can be used to identify overbought/oversold levels as well as pending reversals and short-term activity. I personally use anything above 80 as overbought and below 20 as oversold. When the K value is higher than the D value, the stock is trending up. When the D value is higher that the K value the stock is trending down. The stochastic is currently overbought and due to retreat. This is the fourth indication of pending near-term downward movement.
During the possible formation of this current HnS setup, the 200 day moving average (DMA) has acted as a strong level of resistance. This means the stock approaches the 200 DMA (redline across the chart) and then it drops. Currently, the stock is nearing this DMA further signaling a retreat is coming.
I am only focusing on the first leg of the remaining HnS in this article. The chart above does display the movement of this leg that completes the final shoulder top and the green up arrow depicts estimated completion of the shoulder. After the right shoulder is completed, earnings should be reported for QCOM. The results from earnings could be the jolt that fully completes this pattern and finally excels above the 200 DMA.
Considering the RSI, TSI, VI and stochastic levels, the overall direction favors a move to the downside. Based on historical movement compared to current levels and the current position, the stock could drop at least 8% over the next 28 trading days if not sooner.
Pending Bullish Head And Shoulders For QCOMI see this movement potentially setting up. I plan to write on this in a few more days after the stock moves up a little further.
The initial play will be to the downside. The stochastic is overbought and RSI is nearing that area. A drop is coming, but I am anticipating the stock to rise long-term.
Bearish over next month.
Bullish after that
QCOM Bullish Swing? ** I won't be taking this trade ** It's coming down to a very strong longer term support. This is a super aggressive setup. With earnings very near, it's one I would look to exit before. The distance from the EMA's suggests sideways movement if it doesn't in fact bounce off the support. The stop is too tight to take the risk. Honestly, this could possibly be a day trade setup in the next day or two.
