This past June, Qualcomm Inc., a developer and marketer of digital telecommunication products and services, released last June the world’s first LTE-Advanced smartphone, the Samsung Galaxy S4 LTE-A, which uses QCOM’s newest and most powerful mobile processor, the Snapdragon 800.

This is the first smartphone to offer carrier aggregation, a new technology that combines radio channels across multiple bandwidths to increase data speed and reduce computational latency, at data speeds of 150 megabits per second which is more than twice as fast as previous LTE devices.

THE COMPETITION

Despite its fantastic growth with the rising demand in smartphone-related technology and its own innovative strategies, QCOM is not without its enemies. 

Broadcom Corporation and Texas Instrument, in the mobile device processor market. In response to the release of Snapdragon, Broadcom extended its reach into the 4G smartphone industry and licensed new ARM models to make mobile device chips that are compatible with Broadcom’s LTE modem.

Also in order to keep up with QCOM, Texas Instrument came out with its OMAP 4470 driver which serves companies like BlackBerry who need high-performance technology. However in comparison, QCOM outperforms these companies in EPS (3.56) and P/S (4.95).

COMPANY NEWS

QCOM has a market cap of $105.45 billion, and its trailing twelve month total revenue is $21.64 billion with net income of $6.23 billion. It has a 52-week change of 14.09% and a short percent of float at about 1.1%. Many analysts regard QCOM to be the dominant player in the technology market now, but it will have to uphold its starry performance record to keep ahead of other tech companies that are attacking emerging markets and to stay buoyed against the general volatility of the global economy.

UNUSUAL OPTION ACTIVITY

We define unusual option activity as large block trades that represent a large percentage of daily option volume. The block trade is considered “unusual” if the option volume is above the average daily volume over the past 22 days. At KeeneOnTheMarket.com we scan and analyze order flow from all of the major options exchanges in order to identify any unusual option activity.

The “Institutional Trade”: A trader bought 17,220 QCOM Jan 2015 72.5 Calls and Sold the Jan 52.5 Puts for a $1.42 credit

Risk: $5108 per 1 lot

Reward: Unlimited

Breakeven: $51.08

Cash Received: $2,445,240

MY TRADE

Buying the QCOM Jan 2015 65-75 Call Spread for $2.75 per 1 lot

Risk: $275 per 1 lot

Reward: $725 per 1 lot

Breakeven: $67.75

GREEKS OF THE TRADE

Delta: Long

Gamma: Long

Theta: Short

Vega: Long