Cisco Options (CSCO): Unusual Trading Activity

| May 8, 2012 | 0 Comments

CSCO OptionsOptions in data networking giant Cisco (CSCO) are showing enormous activity today.

Why?  You guessed it… Cisco is scheduled to report its Q2 earnings tomorrow after the close.

What’s more, Cisco’s CEO John Chambers usually makes important comments after its earnings.  And he’s one of the most highly respected and listened to CEOs in the technology community.

So, between CSCO earnings and Chambers’ comments, the broad market could easily be moved in either direction.

Because of this unique pair of events, option traders are scurrying to put on huge positions before tomorrow afternoon.

Our tracking screens are lighting up more than ever with hundreds of thousands of CSCO option contracts changing hands.

Most contracts are showing up on the call side, indicating a bullish outlook.

A majority of the action is concentrated at the CSCO May and June $19 and $20 strike calls.

Prices in May range from $.40 a share for the $19 strike calls to $0.13 for the $20 strike call options.

June expirations are showing a similar setup.  The CSCO June $19 strike calls are being purchased for around $0.65 and the June $20 strike call options for an average price of $0.30.

Today, these four strikes represent the bulk of all option activity for Cisco today.

Why these strikes?  Because the chart is showing very strong support levels between them.

Now, what else is driving this huge call activity?

As most of you know, Cisco Systems is the world’s leading supplier of data networking equipment and software.

Its products include routers, switches, access equipment, and network-management software that allow data communication among computer networks.

In addition, Cisco has recently entered newer markets, such as video conferencing, web-based collaboration, and data center servers.

I think this large call activity is due to upbeat company news as well as highly anticipated news that’s going to come from Chambers.

Investors will listen very intently to his outlook and guidance on the company and the economy.

And, it’s obvious that option traders are expecting some good news to come from him this quarter.

We’ll wait and see if this holds true.

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Category: Unusual Options Trading Activity

About the Author ()

Marcus Haber is the co-editor of Options Trading Research and boasts well over a decade of real-life options experience. Learning from some of the biggest names in the business, Marcus has served as an Options Strategist for a number of firms and was also appointed to the Options Advsiory Board with Pershing, a branch of the Bank of New York.