Option Bear Takes a Big Swipe at Cisco Systems, Inc. (CSCO)

Cisco Systems, Inc. (CSCO) put options are trading at five times the expected intraday rate

Oct 12, 2016 at 11:56 AM
facebook X logo linkedin

Tech names are tanking today, and Cisco Systems, Inc. (NASDAQ:CSCO) is no exception. According to Trade-Alert, the stock was last seen 3.2% lower at $30.04 in sympathy with Fortinet Inc (NASDAQ:FTNT), just a day after dropping 1.4%. Meanwhile, CSCO's put options are being exchanged at five times the usual intraday clip, and register in the 99th annual percentile.

Diving right in, puts account for seven of the stock's 10 most active options. Leading the way is the weekly 10/14 30.50 strike, where it seems that a fresh sweep of 4,342 contracts was purchased for $0.20 apiece -- resulting in a total net debit of roughly $87,000 (premium paid * number of contracts * 100 shares per contract). In so doing, the trader is expecting CSCO to settle this Friday -- when the weekly series expires -- south of $30.50, or risk losing the initial premium paid.

Today's trend toward long puts represents a break from the prevailing trend toward calls. During the last two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open twice as many calls as puts, amid persistent M&A buzz.

Call selling has been extremely popular on CSCO, as well. Based on data from the major exchanges, 34,592 contracts have been sold to open over the past two weeks, versus 19,829 that were bought to open. For instance, the stock's January 2017 30-strike call has seen the biggest increase in open interest over the past 10 sessions, and ISE, CBOE, and PHLX numbers confirm nearly 16,000 contracts have been sold to open in recent months.

As alluded to, Cisco Systems, Inc. (NASDAQ:CSCO) has taken a step back in recent sessions. Prior to that, however, the shares had posted some impressive gains, and as recently as Sept. 2, hit an eight-year high of $31.95. As it is, the tech stock still sports a year-to-date lead of roughly 11%.

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.



How to collect 1 dividend check every day for LIFE

Did you know you could collect 1 dividend check every day the market is open? You could also do it starting with just $605! For me, I'm collecting 70 dividend checks every quarter…which averages around 1.1 dividend checks every business day. There's no trading behind this... no penny stocks or high-risk investments. All you do is buy and hold and you're set. There's no set up required either. If you start buying the dividend stocks I show you today... you could collect 1 dividend per day starting as early as this week. Click here for all the details.