Update $QCOM: Closing Feb Call Spread for a Loss

by Dan January 27, 2016 2:10 pm • Trade Updates

In mid December we made a bullish case for shares of Qualcomm (QCOM), legging into a long February Call position through a calendar structure (read here from December 14).

With out short strike in the money on Dec 29th we rolled the call calendar into a vertical call spread in February leaving us with the following trade:  

Long the QCOM ($50.50) Feb 50/55 call spread for 1.30 (currently worth 2.00)

QCOM reports fiscal Q1 results after the close. And despite our contrarian bullish view, the data points regarding China from Intel (INTC) earlier in the month, and Apple (AAPL) last night, lead us to believe that better than expected forward guidance is not going to happen for QCOM.

We are now going to close the position and take a loss and avoid the potential for a much greater loss if the stock were to go back to the mid $40s, where it was last week.

Action: Sell to close QCOM ($48) Feb 50/55 call spread at .90 for a 40 cent loss.