QUALCOMM is too juicy of a short to pass up on. They reported earnings after the close Wednesday, and as you can see, the market didn't like what they had to say. I didn't listen to the call, but I read several recaps of the call and the quarter and it was pretty ugly.
So I wasn't short going into earnings. So what? QCOM looks destined to go much lower from here. As you can see, the two-day blitzkrieg left a massive gap-down and on Friday it took out previous support at $40. Gaps this big don't get filled quickly, so I'm not inclined to look at this as a long. Most likely, what will happen is QCOM will establish some kind of short-term low, perhaps Friday's low around $38.50, and bounce higher up towards either resistance at round-number $40 or Thursday's high around $42. The bears and I will be waiting for that to happen to load up on some short exposure. Based on the weekly chart, I think QCOM's going back to the mid $30's, but it could go as low as $32.
Options-wise, if the short-term rally plays out like I expect it to, I'm looking to load up on some February $43 puts. Depending on how long this rally takes to play out, I might look out to March and create a put spread involving February puts.
Position: None
Disclaimer: This is not a recommendation and is presented for informational purposes only.
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