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Option Brief: Cisco Systems, Inc. (NASDAQ:CSCO) is having a dreary day both on and off the charts, but that hasn't stopped call volume from soaring to more than two times its average intraday pace. Of the roughly 90,000 calls that have changed hands today, more than 36,000 have crossed at the January 2014 22 strike -- a healthy portion of which have done so on the ask side.
Although Trade-Alert indicates that some speculators are throwing in the towel, and closing out their bullish bets, data from the International Securities Exchange (ISE) indicates that a number of positions have been bought to open. In other words, one group of speculators believes CSCO will shake off its longer-term technical struggles and rise the nearly 6% needed to topple the strike price over the next five-plus weeks. The options market, meanwhile, gives the call a roughly 1-in-5 chance of an in-the-money finish, according to its delta of 0.19, or 19%.
As touched upon, CSCO has had a tough go of things on the charts. On a year-to-date basis, the shares are up a slight 5.6%. More recently, the stock is off more than 13% from its mid-November high of $24, thanks to an ill-received earnings report.
The negative price action is continuing in today's session, with the shares down 2.2% to trade at $20.75, after a European Union (EU) court rejected Cisco's appeal of a decision approving Microsoft Corporation's (NASDAQ:MSFT) 2011 acquisition of Skype. The selling pressure is only being stoked after Citigroup started Cisco Systems, Inc. (NASDAQ:CSCO) with a tepid "sell" rating and price target of $18 this morning.