Bears score big as $QCOM falls

It took less than a week for downside option traders to turn sizable profits in Qualcomm.

On Tuesday, Investitute’s proprietary programs flagged the purchase of 2,500 April $56 puts for $1.19 and $1.20 with shares at $58.28. This was clearly fresh buying, as open interest in the strike was only 47 contracts before the trade occurred.

Those puts rose to $2.96 today, 2.5 times their original purchase price. The stock dropped 6.7% in the same time frame, showing how quickly options can far outperform moves in their underlying shares.

Long puts lock in the price where a stock can be sold no matter how far it might drop, gaining value in a selloff with the potential for significant leverage. The contracts can be purchased either as an outright bearish bet or a hedge on a long-stock position.

QCOM was down 3.45% to $53.66 today. The chip maker declined after holding its annual shareholder meeting.