Cisco Call Option Buyers Look To Make Old Things New

Cisco Unusual Option Activity Report

I brought up Cisco Systems, Inc (Nasdaq: CSCO) during my daily session on the TheoTrade llive chat today. One of the replies from someone watching was that the company isn’t relevant anymore. Believe me, I understand the desire to look beyond the old stodgy companies that provide little to no growth top-line growth. However, can a company that generated $48 billion in revenue in the trailing twelve months (TTM) be irrelevant?

This is where option activity can get you thinking about companies a little differently. It’s a little like someone showing interest in something that you’ve long forgotten. Suddenly it becomes new. That’s what happens when you see large option activity, you immediately begin to weigh the merits of the activity.

Cisco Option Activity

 As of this writing, Cisco has total option volume that is over four times the average. Most of the activity is on the call option side that is a sizzling 5.1 times the average and a put-to-call ratio of 0.156. The call option trades that are being made have seen 56% get filled at the ask price. That shows a strong bullish directional bias. Here’s a breakdown of the significant activity:

  • 17,000 24 DEC 20 $46 calls mostly BOT @ $0.19 to $0.33

With only one-week to expiration, these short-dated options are pointing to near-term upside in CSCO. The breakeven of the trade is near $46.33.

Cisco Fundamentals

While the option activity is pointing to the near-term potential, it doesn’t fully describe what type of opportunity is in CSCO.

Historical three-year growth statistics, it shows that CSCO has grow its revenue by 6.8% and EPS by 11.6% per year. That number pales in comparison to some of it’s more growth-oriented competitors.

Looking at analyst estimates shows a 4% revenue growth for 2022 and 1.5% revenue growth for 2023. Its EPS growth rate is 4.86%.

(Click on image to enlarge)

The fact that CSCO isn’t showing higher numbers is a reflection of its position in its industry and a big reason why it pays a dividend. This is the mistake that many investors make, they compare companies that are of a different fundamental stock type.

1 2 3
View single page >> |

Disclaimer: Neither TheoTrade or any of its officers, directors, employees, other personnel, representatives, agents or independent contractors is, in such capacities, a licensed financial adviser, ...

more
How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.