Markets hate the uncertainty.

With positive and negative headlines investors are confused. The facts remain simple. This is a world class business and the current dividend yield is the largest in its history.

A great way to determine if a company is trading at a cheap valuation is by tracking the dividend yield. Qualcomm (QCOM) is a tech leader and the current dividend extreme presents a low risk opportunity to sell put options betting the stock will not fall much further.

We sell put options to collect cash up front which we get to keep no matter what happens to the stock price through expiration day.

The cash received from selling the put provides additional downside protection and the potential to buy a stock we like at a discount to current share price. This is why selling puts is a great way to earn income while taking less risk than buying shares of stock today.

Qualcomm is a leading maker of semiconductor chips for mobile devices. The company owns rights to the dominant technologies that 3G and 4G (and soon 5G) cellphones use to deliver data. They earn a very attractive 20% profit margin.

The company has a strong balance sheet with plenty of cash to pay off all of its debt and extra cash for stock buybacks and dividend payments. Qualcomm rewards shareholder's handsomely by increasing its dividend payment each year which currently yields 4.4% (twice as much as SP500 and 10 year treasury bond)

Shares are currently out of favor due to US Government blocking the merger with Broadcom. However, Broadcom's offer shows that Qualcomm should be worth closer to the take out offer of $79 than today's price.

The chart shows the history of Qualcomm stock verse its dividend yield. At other points in the stocks history when the dividend yield has been this high the stock price is near a bottom.

To take advantage of this extreme, sell the April 20, $55 puts on Qualcomm for $1.40 limit order.
The 2.5% upfront payment comes out to an annualized return of 38.7%.

Using a stoploss at $49 we will protect our capital should the stock continue to decline. If shares close below $49 then place an order to buy to close the $55 put option.

Disclosure: I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article.