CSCO Analysis

Cisco Systems Inc, (CSCO)

Update 8/21/2017: CSCO fell a dollar after earnings were published after coming in at $0.62, a penny plus change above analysts’ consensus expectation. It declined the first trading session after earnings were published, and continued its descent for two subsequent days. It rose again on the third day, and I exited for a loss less than a week before the options expired.

Shares declined by 5.6^ over five days, or a -409% annual rate. The options position produced a -39.9% loss for a -2,912% annual rate


CSCO publishes earnings on Wednesday after the closing bell.

I shall use options that trade for the last time nine days hence, on Aug. 25.

Implied volatility stands at 22%, which is 1.9 times the VIX, a measure of the volatility of the S&P 500 index.

CSCO’s IV stands in the 68th percentile of its annual range and the 84th percentile of its most recent broad movement.

The price used for analysis was $32.41.

Premium: $1.04 Expire OTM  
CSCO-iron fly Strike Odds Delta
Long 34.50 93.2% 7
Break-even 33.54 ~77.0% ~24
Short 32.50 53.6% 48
Puts
Short 32.50 46.4% 52
Break-even 31.54 ~70.0% ~29
Long 30.50 83.6% 15

The premium is 52% of the width of the position’s wings.

The risk/reward ratio is 0.9:1.

The expected move is $0.97, within the $1.00 break-even width.

Decision for My Account

I have entered an order on CSCO as described above. The stock at the time of entry was priced at $32.43.

By Tim Bovee, Portland, Oregon, Aug. 16, 2017

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

License
Creative Commons License

All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.

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