OptionsHouse

Options Trading News

December 10, 2012  Mon 1:47 AM CT

CSCO: SEE CHART GET CHAIN FIND STRATEGIES
Shares of Cisco Systems had a good week but a relatively weak session on Friday while its option activity was led by a large call trade.

optionMONSTER systems show that 10,000 July 22 calls were sold for $0.53 in volume that exceeded the open interest. At the same time, 10,000 January 2014 25 calls were bought for $0.43 at less than the open interest.

This could be a roll, with the trader targeting a lower strike that is closer in time. But we rarely see a roll forward, so it seems likely that this is a diagonal spread. The latter case would take in a credit and therefore be able to profit with the stock anywhere below $22 and would generate a maximum profit with shares at that price. (See our Education section)

CSCO finished the day and week at $19.34, down 0.74 percent after trading up to $19.74. That matched the high from Sept. 6, which was the networking giant's highest price since shares gapped down at the start of May. The stock bounced off support just below $17 a month ago.
Share this article with your friends


Related Stories

CSCO

Cisco draws bearish trade after results

August 18, 2016

The networking giant is up 15 percent in the last three months but last night reported bearish quarterly numbers and announced layoffs.

OptionsHouse

Premium Services

Education & Strategy

Dissecting a big institutional trade

This week's column will study a recent call ratio spread. We're not recommending using this strategy because it has potentially huge risk. But we can learn from this different use of options by a large institutional investor.

View more education articles »