Trade of the Day: Cisco Systems (CSCO)

Make your bearish bets early, since markets will likely react to debt ceiling talks

   

Trade of the Day: Cisco Systems (CSCO)

Cisco Systems (CSCO) has been accelerating to the downside recently as more and more major reversal patterns appear around the market. The break at this level (and a completed head-and-shoulders pattern) makes it much more likely that the stock will fill the gap and reach $21 per share.  Traders are fairly split on this stock right now based on the chain sheet, but there is an unusually large amount of volume in the out-of-the-money puts expiring in December. This conforms to our analysis as well. We recommend opening a new position here, as selling could accelerate even more this week as traders deal with the budget/debt ceiling crisis and the labor report.

As usual, set a limit order to avoid paying too much for the option. Market orders can drive the price up very quickly and increase the hurdle required to get to a profitable position.

Recommendation:
‘Buy to open’ the CSCO November 23 Puts (CSCO131116P00023000) for a maximum price of 92 cents.

InvestorPlace advisors John Jagerson and S. Wade Hansen are co-founders of LearningMarkets.com, as well as the co-editors of SlingShot Trader, a trading service designed to help you make options profits by trading the news.  Get in on the next trade and get 1 free month today by clicking here.

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Article printed from InvestorPlace Media, http://investorplace.com/2013/09/trade-of-the-day-cisco-systems-csco-2/.

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