QCOM - Fractal pattern analysis
Since 2002, when this thing makes a marginal higher high (this is log mode, so it might actually be a significant new high in linear mode), but then sells off and breaks through supports, and is then followed with a small choppy consolidation / build up, you can go back to the last high before the one it dropped from to find a pretty reliable target level for the very next move.
Not shown is a trendline analysis I did. I drew a line from the bottom of each move that led to the top it sold off from, and then a parallel line from the bottom it formed after, and every single time it hit the target above or at the trendline. So zoomed in, here's our price and timing for target.
It's pointing to the week of Dec 2nd. Funny enough, my personal system has almost the exact same price and timing for upside target.
Doesn't look like there's any expirations between Dec 2 and 20th. Here's the chain.
I'm not sure about paying $11 for a $175 call that wouldn't even pay 2:1 on expiration date. Of course, we expect it to happen before expiration so there should be some premium built in based on theta (time) and volatility. Still, my strategy for options is to plan the move as if it happens on expiration. And I just don't like the R/R on these when I can buy $100 shares with a stop and potentially make $2k.
There is a weekly available Nov 29th that shaves $1-$2 off the same strike, and has $180's in the low $7's, with the $193 target giving us just under a 2:1 return.
So you can either buy shares using $166 as a stop targeting $193, or "as of right now" you can buy $180 Nov 29 calls for mid $7's with contract price target of $13-$14.
Caveat - after hours news released that ARM is cancelling QCOM's chip design license, a 60-day notice. They have been in a legal battle because ARM sued QCOM in 2022 saying QCOM failed to negotiate a new license after it acquired a new company, Nuvia, founded by Apple chip engineers. December is when they meet in court.
Yall know I don't much care for news and that I don't apply cause and effect to it. But it's worth noting for anyone interested in this play. If you do decide to do options, my advice would be to size accordingly to manage risk. That's hard to do on expensive options like this. I don't have stops when I buy options. The premium I pay is my risk management.. I'm willing to lose it all and I choose the amount of contracts based on my risk tolerance. Thus, I cannot advise on options stop levels, so if that's something you need, you are on your own.
I will be watching QCOM closely tomorrow and the rest of the week to see how it responds to the news. Hopefully the option pricing comes down a bit and it holds support above that $166 stop, giving us much better parameters.
