Chips stack up for bulls in $QCOM

Qualcomm caught a bid late this afternoon, turning substantial profits for short-term option positions.

On Nov. 10, Investitute’s tracking systems found that 6,000 Weekly $67 calls expiring on Dec. 1 were purchased mostly in one print for $0.79 with shares at $64.43. This was clearly fresh buying, as open interest in the strike was a mere 73 contracts before the activity appeared.

Those calls traded for $2 today, more than double their purchase price. The stock rose just 5 percent at the same time, underscoring the type of leverage that can be obtained with options.

It was the second winning trade in QCOM posted on Investitute this month. In addition, Investitute co-founder Pete Najarian highlight heavy buying in the December $70 calls on CNBC’s “Halftime Report” last Thursday.

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 up 2.19 percent to $68.13 today. The chip maker was in the red for most of the session until popping less than an hour before the closing bell on reports that Broadcom would raise its acquisition offer for the company.