Bulls score with $QCOM

It took just three sessions for option traders to post exponential gains on upside options in Qualcomm (QCOM) that expire tomorrow afternoon.

On Jul. 27, Market Rebellion’s Unusual Activity Service identified the purchase of 9,200 Weekly $95 calls, expiring on Jul. 31. for $0.80 to $1.36 with shares at $91.71. This was clearly fresh buying, as open interest in the strike was 2,412 contracts before the activity appeared.

Those calls have traded for as much as $10.00 so far today, nearly 10 times their average purchase price. The stock rose 14.47% in the same time frame, illustrating the kind of leverage that can be achieved quickly with options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

QCOM was last up 12.66% to $104.81 this morning, setting new highs. The chip maker beat earnings estimates after the market closed yesterday and also announced a resolution to its dispute with Huawei, including signing a new license agreement.