Dear Reader,

Did you see this trade setup? Without this indicator, I wouldn’t have spotted it myself.

Today we are looking at a trade setup for Qualcomm Inc. stock symbol: QCOM. Qualcomm Inc. designs, manufactures and markets digital wireless telecom products and services based on the Code Division Multiple Access (CDMA) technology. The products include CDMA-based integrated circuits and system software for wireless voice and data communications as well as global positioning system (GPS) products. 

Now, let’s begin to break down the Daily Price chart for QCOM. Below is a Daily Price Chart with the price line displayed by an OHLC bar.

Buy QCOM Stock

The Daily Price chart above shows that QCOM stock has been hitting new 52-Week Highs regularly since early May.

The Hughes Optioneering team looks for stocks that are making a series of 52-Week Highs as this is a good indicator that the stock is in a powerful uptrend.

You see, after a stock makes a series of two or more 52-Week Highs, the stock typically continues its price uptrend and should be purchased.

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Profit if QCOM is Up, Down, or Flat

Now, since QCOM is currently making a series of new 52-Week Highs and will likely rally from here, let’s use the Hughes Optioneering calculator to look at the potential returns for a QCOM call option spread.

For this option spread, the calculator analysis below reveals the cost of the spread is $322 (circled). The maximum risk for an option spread is the cost of the spread.

The analysis reveals that if QCOM stock is flat or up at all at expiration the spread will realize a 55.3% return (circled). 

And if QCOM stock decreases 7.5% at option expiration, the option spread would make a 55.3% return (circled). 

Due to option pricing characteristics, this option spread has a ‘built in’ 55.3% profit potential when the trade was identified*.

The prices and returns represented below were calculated based on the current stock and option pricing for QCOM on 5/20/2024 before commissions.

Option spread trades can result in a higher percentage of winning trades compared to a directional option trade if you can profit when the underlying stock/ETF is up, down or flat.

A higher percentage of winning trades can give you the discipline needed to become a successful trader. 

The Hughes Optioneering Team is here to help you identify profit opportunities just like this one.

Wishing You the Best in Investing Success,

Chuck Hughes

Editor, Trade of the Day

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