Qualcomm (Nasdaq: QCOM) Stock: The Virtue of Patience

There's an old expression in the U.S. Army: Soldiers are often forced to "hurry up and wait."

That's what it's like much of the time for those trading the loophole trade, or spread trades (debit or credit). To realize maximum profit or get paid your money on this trade, you have to wait until the expiration of the option contracts.

That's what we're now facing with our Qualcomm Inc. (Nasdaq: QCOM) trade - and I want you to make money from this situation.

First watch my video, which shows you exactly what to do. I also flesh out this advice below.

How to Maximize Your Potential in Qualcomm

On July 8, the Qualcomm trade was a Debit Spread using puts. Specifically, it was a July15 67.50/70 P spread. This was a Money Calendar Sell candidate, as you can see:

Qualcomm Stock

 

The 10-year look at QCOM's price moves from the start to end date show an average profit move down of $1.99. The last three years have averaged around a $2.50 drop in price.

Qualcomm Stock

The concern for some traders undertaking this type of trade, a spread trade, is  waiting until expiration to get the chance at full profitability. In this case, the trade day's length is 30. For some, waiting a whole month to get paid causes impatience and frustration. Not being able to get the full profit right away bugs them.

If you're an impatient trader and you'll start squirming in your seat if you can't close the trade for maximum profitability within a week, this strategy of trading spreads might not be for you.

But for those of you perfectly content with letting the trade run its course for a month, and waiting the necessary time for the profits to potentially roll in and give you a shot at +61%, then you will like this more patient trading approach.

Here is the Qualcomm trade, as shown by these charts:

Qualcomm Stock

Fast forward to the close of Wednesday, July 8:

Qualcomm Stock

Here are considerations that would cause some traders to close the position early:

  1. You need to come up with money for another trade, and closing this trade gets you that money.
  2. A margin call.
  3. You find yourself getting antsy and simply want to close the trade without letting it fully play out.

Here is the trade situation as of the close of markets Wednesday, July 8:

Qualcomm Stock

I often get asked if we should take a trade off early. In situations like this on my spreads, where giving it a bit more time could bring in more profitability, I will exert patience and wait.  I look at where the stock is compared to the sold strike and gauge if I'm safe that it won't touch that price. In the case of QCOM, the data tell me that it will stay below the $67.50 price, at least until expiration.

Right now, if you must close this trade, the natural pricing shows a +32% ROI.  Not bad, but for me, I'll "hurry up and wait" another week to go after that full profit potential of +61% ROI.

For a detailed explanation of everything you've just read, watch the video embedded above, which drills down and explains what to do - and what not to do - in explicit and easy-to-understand detail.

Excuse Me. Is This Your Shoe? The United States has its own debt problems, of course. But for the time being, the Fed can print its way out of trouble - interest rates are likely to stay low for now. And investors see the United States as a safe destination in the "flight to quality" that happens at times like these. But we know when the next shoe is gonna drop and how you can profit when it does...

Insider's View: As one of the world's foremost authorities on Options Trading, Tom is on top of trades like this - which 99% of investors can miss - all the time. His Money Calendar Alert readers have a direct pipeline to these "Payout Opportunities", allowing them to schedule them like a daily planner. Learn more about Tom's Money Calendar Alert service here.