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Butterfly on QCOM on 4/25/2013

QUALCOMM Incorporated (Qualcomm), incorporated on August 15, 1991, is engaged in design, manufacture, have manufactured on its behalf and market digital communications products and services based on code division multiple access (CDMA), Orthogonal Frequency Division Multiplexing (OFDMA) and other technologies. The Company operates in four segments: Qualcomm CDMA Technologies (QCT); Qualcomm Technology Licensing (QTL); Qualcomm Wireless & Internet (QWI), and Qualcomm Strategic Initiatives (QSI). The Company develops and supply integrated circuits and system software based on CDMA, OFDMA and other technologies for uses in voice and data communications, networking, application processing, multimedia and global positioning system products. In November 2012, the Company acquired certain assets of EPOS Development, Ltd. (EPOS), developer of ultrasound technologies for input solutions, including pen, stylus and gesture recognition.


Stockwinners is bullish on this name for the following reasons:

  1. The stock is now at important support, and ideally it holds here and stabilizes.  62.25 is the unchanged level on the stock for 2013, so that’s the key level we are watching.  Since our trade structure expires in June, we still have plenty of time for the stock to bounce.  Moreover, the actual earnings report, and even the purported weak guidance, did not seem too concerning overall, so at the least, we do expect to get a chance to exit the trade on a bounce in the stock back to the 65-67.5 area in May or June.
  2. The payoff of this trade is really attractive

Trade : Buy 1 June 62.5/65/67.5 call butterfly for less than .48

Trade

  • Buy 1 June $62.50 Call at $1.75
  • Sell 2 June $65.00 Call at $0.78
  • Buy 1 June $67.50 Call at $0.27
  • For a net debit of $0.46

Profit/Loss Analysis

  • Breakeven at $62.96 and $67.04
  • Maximum profit is $204.00 at strike of $65.00
  • Maximum loss is ($46.00) at strike of $68.00

Closing Summary

  • Sold 1 June $62.50 Call at $2.41
  • Bought 2 June $65.00 Call at $1.02
  • Sold 1 June $67.50 Call at $0.34

Position closed on 5/23/2013 at price of $0.71 with a 54.35% gain in 27 days.

Updates

5/23/2013 10:09:14 AM

Stockwinners is happy with the gains and is closing this trade:

  • Sell 1 June 62.5 call for 2.41
  • Buy 2 June 65 call for 1.02
  • Sell 1 June 67.5 call for .34

If you decide to stay long on this trade, be sure to adjust your stop-loss.

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