Joseph Hargett (jhargett@sir-inc.com) Traders still have to slog through another two trading sessions before networking giant Cisco Systems Inc. (CSCO) will release its quarterly earnings report, and if recent activity in the options pits is any indication, the stock could continue to see call open interest rise. For instance, volume swelled to more than 141,700 contracts on Monday, more than doubling CSCO's daily options activity. Some 76% of this volume traded on the call side of the coin.
As a result of the recent call activity, CSCO's Schaeffer's put/call open interest ratio (SOIR) has slipped from its post October expiration perch near 1.10 to its current perch at 0.98. There appears to be additional room on the bullish bandwagon, as the current SOIR arrives above 80% of all those taken in the past year.
Turning to the International Securities Exchange (ISE) and Chicago Board Options Exchange (CBOE), we find that nearly four calls have been bought to open for every one put purchased in the prior two weeks. The resulting 10-day call/put volume ratio arrives just 11 percentage points shy of an annual bullish peak.
CSCO is also trading below peak front-month call open interest at the 25 level. More than 46,000 calls reside at the November 25 strike, creating a potential layer of options-related resistance overhead. Taken together, these readings indicate that CSCO has its work cut out for it when it steps into the earnings confessional after the close of trading tomorrow night.
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