Trade of the Day: Cisco Systems (CSCO)

by John Jagerson | September 30, 2013 8:24 am

Cisco Systems (CSCO[1]) 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[2]) 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[3], 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[4].

Follow John Jagerson[5] and Wade Hansen[6] at Google+!

Endnotes:
  1. CSCO: http://studio-5.financialcontent.com/investplace/quote?Symbol=CSCO
  2. CSCO131116P00023000: http://studio-5.financialcontent.com/investplace/quote?Symbol=CSCO131116P00023000
  3. SlingShot Trader: http://slingshot-trader.investorplace.com/index.html
  4. by clicking here: https://order.investorplace.com/?sid=QP7117
  5. John Jagerson: https://plus.google.com/115711248746858558308?rel=author
  6. Wade Hansen: https://plus.google.com/108450692850544646698?rel=author

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