Now looks like a solid opportunity to bet on CSCO's next move with options
The shares of Cisco Systems Inc (NASDAQ:CSCO) are up 0.2% to trade $55.28 at last check. The equity has found a floor at the $53.50 level since cooling off from its Dec. 29, all-time high of $64.28. Another reason investors should not shy away from the tech concern just yet is that CSCO could soon start chipping away at its 12.8% year-to-date deficit, given the equity has just pulled back to a historically bullish trendline that has preceded major rallies.
Digging deeper, Cisco Systems stock recently came within one standard deviation of its 320-day moving average. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, comparable moves have occurred three times in the past three years, with CSCO enjoying a positive one-month return every time, while averaging an 8.1% rise. A similar move from its current perch would put the equity back over the $59 mark for the first time since mid-January.
An unwinding of pessimism in the options pits could blow additional tailwinds for Cisco Systems stock. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 50-day put/call volume ratio stands higher than 97% of readings from the past year. This indicates long puts have been getting picked up at much faster-than-usual clip.
What's more, the security sports attractively priced premiums at the moment. This is per CSCO's Schaeffer's Volatility Index (SVI) of 20%, which sits in the low 18th percentile of its 12-month range. In other words, options traders are pricing in relatively low volatility expectations right now.