[Trade Detail] QCOM Is a Buy
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We’ve had five new trade recommendations since last Wednesday in my flagship newsletter Quick Hit Profits. It’s been a busy week.
On top of that, we’re seeing some older trades continue to climb — including one that hit 100% just yesterday!
By following a comprehensive strategy like I do in Quick Hit Profits with my Profit Trigger, I know my subscribers are in good shape to profit.
And I have a brand-new opportunity today that I wanted to walk you through. It’s one that’s straight out of my Quick Hit Profits service.
By going through this trade setup, we’ll recap everything we’ve covered so far in the Weekly Options Corner and put this education into practice.
Now, let’s walk through our latest trade on Qualcomm (Nasdaq: QCOM), the semiconductor stock.
QCOM Hit the Profit Trigger
For my approach, I have a short list — roughly 75 stocks — that I watch for.
And yesterday, one of the stocks on my list hit my trigger.
Qualcomm reported earnings for the third quarter that topped analysts’ expectations by 22%.
Remember, beating analysts’ expectations is just the first part of my Profit Trigger. I also want to see action in the stock’s price…
And shares of Qualcomm shot up over 10% yesterday — more than enough to trigger a trade. Even after dealing with COVID-19 this year, the company still reported stellar results and is now seeing a clearer path for its 5G mobile-chip technology as regulatory battles ease.
This is a whirlwind of new information that the analyst community now has to catch up to. Shares rallied on the news.
A lot of investors think they’ve already missed the trade. The stock jumped 10%, and they think it doesn’t have any room to run higher.
But time after time, my Profit Trigger has shown that isn’t the case. Going forward, the upgrades from the analysts help propel the stock higher as investors realize there’s a mispricing opportunity.
Picking the Perfect Option
Now that Qualcomm hit my Profit Trigger, signaling a rally over the next two months, it’s time to pick the perfect option.
Luckily for us, it’s the easiest part of the equation. Since we expect the stock to climb, we will use a call option.
Then, to pick the strike price, we simply want to select the one closest to where the stock is currently trading. Qualcomm closed yesterday right around $145 a share. I expect the stock to rise for the next two months or so, but I like to add an extra month to our expiration date to give us a little more time. So we want to use the January 15, 2021 expiration date.
So our perfect trade on Qualcomm is the $145 January 15, 2021 call option (QCOM210115C00145000).
The limit price — the highest price I recommend paying for the option — is $9. So, since each contract is 100 shares, it would cost $900 for one. Buying 10 contracts would cost $9,000.
Below, you can see how I searched for the option in my broker platform. I searched for the symbol, QCOM. Then, I looked for trades expiring January 15, 2021. Finally, I found the strike price that I wanted to trade. This may look different on different platforms, but they should have the same elements.
Now, if you wanted to make this trade at home, we recommend you always review your trade details to double-check that it’s entered correctly.
As you can see in this trade, we’re buying the option on QCOM. The expiration date is January 15, the strike price is $145 and we’re using a $9 limit price. We’re also setting the order to be “GTC” — or good till cancelled — meaning we’re giving the trade time to get filled.
Again, the trade confirmation will look different from broker to broker. But these elements should all be there.
You can see that this broker platform also tells some more information about the potential outcome of the trade. We will cover many of these ideas in future issues of the Weekly Options Corner.
Remember, options trades can be risky. Never invest more than you’re willing to lose.
This recommendation has the potential to be another triple-digit opportunity in the next few months. And as we said, we’ve had five new recommendations since last Wednesday as part of Quick Hit Profits. On average, I send out one trade alert per week to those subscribers. But remember, my Profit Trigger is most active during earnings season — which we’re in right now.
That’s especially good for you, because today, my publisher is allowing me to offer a discounted subscription to Quick Hit Profits just for readers of the Weekly Options Corner.
No one else has access to this special offer. And there’s no better time to join me in Quick Hit Profits. I urge you to take advantage of it here.
You’ve had more options education than most people ever will, and you could be set to see massive profits. Don’t miss it.
Now that we’ve walked through a trade that you can make today, we’ll hit on more details in the coming weeks about managing these opportunities and what to watch for.
Chad Shoop, CMT
Editor, Quick Hit Profits
Investing has consumed my life since college. While double majoring in finance and economics at the University of North Carolina at Greensboro, I founded the university’s economics club, joined the finance club and participated in the Chartered Financial Analyst research competition to represent our school.