Stocks quoted in this article:
A recent crop of Cisco Systems, Inc. (NASDAQ:CSCO) option bears could be in trouble today, with the blue chip -- along with its index peers -- pointed higher ahead of the bell. During Wednesday's holiday-shortened session, a slew of speculators gambled on resistance in the $25 region, which has halted CSCO's rally attempts in 2013.
Digging deeper, the stock saw roughly 32,000 calls change hands -- more than four times the number of puts exchanged. Most active was the weekly 7/5 25-strike call, which saw more than 7,500 contracts traded. The majority of the calls crossed on the bid side, and open interest surged after the fact, pointing to sell-to-open action.
By writing the calls to open, the sellers were expecting CSCO -- which closed at $24.59 on Wednesday -- to remain south of $25 through the end of today's session, which represents the options' lifetime. In this best-case scenario, the calls will remain out of the money, and the sellers can pocket the initial premium received from the sale. However, should CSCO topple $25 -- which would mark a two-year high -- the sellers could be assigned.
Broadening our sentiment scope, Wall Street is optimistic when it comes to Cisco Systems, Inc. (NASDAQ:CSCO). The stock boasts 20 "strong buys" and two "buy" endorsements, compared to seven "holds" and just one "sell" or worse rating.