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

Cisco Systems, Inc. option bulls eye a move to multi-year highs

by 7/3/2014 10:52 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. One name of notable interest this afternoon is Cisco Systems, Inc. (NASDAQ:CSCO). Falling off the list since last time were Nokia Corporation (ADR) (NYSE:NOK), SunEdison Inc (NYSE:SUNE), and Walgreen Company (NYSE:WAG).


Cisco Systems, Inc. is following in the bullish footsteps of the broader equities markets today -- up 0.8% to trade at $25.22. This upward momentum has CSCO toppling its recent trading range, and option traders are responding in kind. At last check, calls were trading at a rate four times the intraday average, and outpacing puts by a roughly 10-to-1 margin.

Diving deeper reveals the equity's October 26 call has received some notable attention. Of the 10,125 contracts on the tape thus far, 97% have traded at the ask price, pointing to buyer-driven activity. Plus, implied volatility has ticked higher, suggesting new positions are being initiated. This theory is confirmed by data from the International Securities Exchange (ISE).

The volume-weighted average price (VWAP) for the calls is $0.69, making breakeven at the close on Friday, Oct. 17 -- when the options expire -- $26.69 (strike plus VWAP). Gains are theoretically unlimited with each additional notch above here, while risk is capped at the 100% of the premium paid, should CSCO be below $26 at the end of the option's lifetime. It should be noted that Cisco Systems, Inc. (NASDAQ:CSCO) hasn't traded north of this breakeven mark since May 2010.


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