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Most Active Options Update: Cisco Systems, Inc. (CSCO)

CSCO option traders call for more downside

by 12/13/2013 11:43 AM
Stocks quoted in this article:

The 20 stocks listed in the table below have attracted the highest total options volume during the past 10 trading days. Names highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. Three names of notable interest this afternoon are Cisco Systems, Inc. (NASDAQ:CSCO), Twitter Inc (NYSE:TWTR), and Apple Inc. (NASDAQ:AAPL).

Twitter Inc tagged another record peak today, after RBC upped its price target on the stock earlier. Meanwhile, in TWTR's options pits, the December 60 call has seen a rush of buy-to-open activity. Elsewhere, Apple Inc. is failing to capitalize on an early morning price-target hike from Evercore Partners, with the shares in the red at last check. Despite this negative price action, call volume is running at a 57% mark-up to the expected intraday pace. Finally, here's a closer look at how option traders are initiating front-month bearish bets on Cisco Systems, Inc.


Cisco Systems, Inc. has had a rough go of things since hitting a three-year peak of $26.49 in early August, with the shares off about 23%. One group of speculators today bet on the technical troubles to continue in the near term by targeting the stock's December 19 puts. Nearly 18,400 contracts have changed hands here thus far -- including several large blocks. All but 2% have gone off on the ask side, and implied volatility has jumped 3.1 percentage points, hinting at the initiation of new bearish positions.

By purchasing the out-of-the-money puts, speculators expect CSCO -- currently lingering near $20.47 -- to surrender an additional 7.2% by next Friday's close. Should the equity fail to breach the strike price, the most the traders stand to lose is the initial premium paid. According to Trade-Alert, the volume-weighted average price for the puts is a modest $0.03 apiece. In fact, according to the stock's Schaeffer's Volatility Index (SVI) of 25%, which ranks in the 25th percentile of its annual range, CSCO's short-term options are rather affordable at the moment, from a volatility perspective.

On the fundamental front, Cisco Systems, Inc. (NASDAQ:CSCO) yesterday lowered its fiscal 2014 revenue outlook (subscription required). This morning, meanwhile, the networking specialist announced a 10-year deal with the Ontario government that is projected to create roughly 1,700 jobs in the Canadian province.


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