The Dow Stock Bearish Options Traders Need to Target

CSCO tends to underperform in October

Sep 28, 2017 at 2:52 PM
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Earlier we took at the 25 worst stocks to own in October, a list that includes Dow component Cisco Systems, Inc. (NASDAQ:CSCO). We examine the tech stock below, taking a closer look at recent options activity on CSCO.

Cisco is Staring Up at Potential Options-Related Resistance

CSCO sports a year-to-date lead of 10.4%, last seen trading at $33.37. However, the shares were recently rejected near the site of their mid-May pre-bear gap highs, indicating a potential layer of resistance going forward. Plus, Cisco's October win rate over the past 10 years is just 30%, with an average monthly loss of 1.07%. 

Options traders, meanwhile, have shown bullish tendencies. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security has a 10-day call/put volume ratio of 2.38, good enough to rank in the 71st annual percentile. Cisco also has notable open interest of 22,713 contracts just overheard at the October 34 call, while the October 33 call is home to peak open interest of 47,115. 

Finally, it's worth nothing that it's seemingly a good time to target short-term options on Cisco Systems. This is according to its Schaeffer's Volatility Index (SVI) of 15%, which ranks below 78% of comparable readings during the past year. In other words, volatility expectations are rather muted at the moment for near-term contracts. 

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