Pre-Earnings Call Options Hot On Cisco Systems, Inc. (CSCO)

Cisco Systems, Inc. (NASDAQ:CSCO) will take its turn in the earnings confessional after tonight's close

by Karee Venema

Published on May 18, 2016 at 11:35 AM

Although earnings season is all but over, there are still a handful of notable names gearing up to report. Tech firm Cisco Systems, Inc. (NASDAQ:CSCO), for instance, is scheduled to report fiscal third-quarter earnings after tonight's close. Ahead of the event, the Dow stock is up 0.1% at $26.68. The options market, meanwhile, is expecting a big post-earnings move for CSCO stock -- pricing in a 7.6% swing for tomorrow's trading. By the looks of it, options traders are anticipating CSCO's post-earnings action will resolve to the upside.

Over the course of the past 10 trading sessions at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open 34,082 call options, compared to 15,498 put options. Echoing this is CSCO's gamma-weighted Schaeffer's put/call open interest ratio (SOIR) of 0.79, meaning near-the-money calls outweigh puts among options expiring in three months or less.

Looking back over the past two weeks, CSCO's June 28 call has seen the biggest rise in open interest, with 18,329 contracts added. According to the major options exchanges, a significant amount of this activity has been of the buy-to-open kind, meaning traders are betting on CSCO to rally north of $28 by the close on Friday, June 17 -- when the back-month options expire.

Today, CSCO call options are crossing at two times what's typically seen at this point in the day -- and are outpacing puts by a more than 2-to-1 margin. Most active is the stock's in-the-money July 25 call, where it looks like traders might be selling to close their positions.

On the charts, Cisco Systems, Inc. (NASDAQ:CSCO) hasn't traded south of $25 since mid-February. In fact, since hitting an annual low of $22.46 on Feb. 10, CSCO stock has jumped nearly 19%. Regardless, the most any CSCO call buyer stands to lose if their options expire out of the money is the initial premium paid.

Sign up now for Schaeffer's Market Recap to get all the day's big stock movers, must-know technical  levels, and top economic stories straight to your inbox.

A Schaeffer's exclusive

6 Sectors for Summer

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



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

Huge New Legal Marijuana Market Has Shortage Crisis
250 million Europeans have access to medical marijuana. There's already a shortage....
J M Smucker Stock Jammed by Ugly Sales Outlook
J M Smucker's fourth-quarter profits and revenue were better than Wall Street expected
NIO Rises on Record-Breaking Deliveries
Nio stock hit a record high in vehicle deliveries for May
The Next Big Player in U.S. MJ Boom
Most pure-play marijuana stocks in the U.S. trade on the Over-the-Counter stock exchange.