Earnings, M&A Buzz Bring Cisco System, Inc. (CSCO) Bulls Out

Cisco Systems, Inc. (NASDAQ:CSCO) option traders are targeting front-month calls today

by Karee Venema

Published on May 13, 2015 at 2:23 PM

Cisco Systems, Inc. (NASDAQ:CSCO) is slated to take its turn on the earnings stage after tonight's close, and ahead of the event -- and amid speculation the firm could have its eye on one cybersecurity firm -- the stock is up 0.2% at $29.30. In the options arena, total volume is running at three times the average intraday pace, with calls having a significant lead over puts.

Drilling down, it appears one speculator may be initiating a short strangle with CSCO's May 28.50 put and 29 call. Elsewhere, it looks as if more vanilla option traders are buying to open the stock's May 30 call -- according to data from the International Securities Exchange (ISE) -- to bet on an end-of-week breakout above the round-number $30 mark. Delta on the May 30 call is docked at 0.34, indicating a 34% chance the option will be in the money at this Friday's close, when front-month options expire.

Widening the sentiment scope reveals optimism has been building toward a stock that's up more than 28% year-over-year. Among the brokerage bunch, 20 out of 26 analysts maintain a "buy" or better rating on the equity. However, the average 12-month price target of $30.48 sits at a slim 3.9% premium to current trading levels -- leaving the door wide open for a round of price-target hikes, should CSCO impress in the earnings confessional.

Looking over the past eight quarters, Cisco Systems, Inc. (NASDAQ:CSCO) has moved an average of 6.7% in the session subsequent to reporting. This time around, the options market is expected a slimmer move of 4.4%, based on the equity's near-term at-the-money straddle.


A Schaeffer's exclusive

6 Sectors for Summer

Access your FREE insider report before it's too late!


  
 

Partnercenter


NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories


3 Million to Lose Jobs – and Not Because of Coronavirus?
A terrifying new trend can make you a millionaire or destroy your financial future.
Wall Street Reclaims Two Key Trendlines This Week
U.S.-China tensions and dire economic data still weigh, though
Dell Stock Jumps on Upbeat First Quarter
DELL announced an upbeat first-quarter report
Research Exposes Shortcut to Stock Market Wins
A simple way to stop picking losers, and start cashing in like Wall Street's elite.