Each week, I’ll give an overview of a stock and Licia Leslie will follow that up with a chart analysis the next day.

Bill Griffo will chime in with macro analysis and Andrew Giovinazzi will then finish out the week with a volatility breakdown.

Have a stock YOU want us to review? Email my team here. – Mark

Hey Traders,

Overall, the S&P 500 is up 7.5% over 11 trading sessions. Meanwhile Qualcomm Inc. (Ticker: QCOM) is up 19.5% over the same time period.

Now, there’s still plenty of runway above with an all-time-high near $185 clocked in at the beginning of 2022. 

However, unless a new FOMO rally is about to begin it may be a good time to take profits.

QCOM reported solid earnings for Q3 beating EPS and Revenue estimates plus providing decent guidance.

Management sees strong demand for chips needed for Apple’s latest iPhones and by Chinese device makers.

The good news may be priced in now.

Today, we’ll take a look at option positioning and technical analysis.

QCOM’s fair value price is currently $140 and their chip and licensing businesses both continue generating healthy cash flow.

So, longer-term they should continue generating excellent returns for shareholders.

Trading however is all about time frames and looking at the option positioning of QCOM I would look at the $130 level as a short-term top. If the market really does get a boost from new cash coming in then maybe we could see a larger move.

QCOM Option Positioning

The bars below show the amount of put (blue) and call (orange) activity at each strike .. notice the massive amount of calls at the 115,120, and 125 strikes …

This particular chart shows the gamma at each strike … Gamma has become incredibly important for stock and option traders to be aware of because option dealers must manage billions of gamma risk in their option books.

Option dealers must rebalance their books as the market moves away from the largest strikes … They also must chase the market at times when the market is moving towards large strikes. 

However, when a stock moves a long way and investors are no longer rolling calls, in this instance higher the rally runs out of steam …

That may be the case now with QCOM.