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Today, we’re opening a new bullish trade on Cisco Systems, Inc. (NASDAQ:CSCO) following the stock’s move past its earnings high that was established on Feb. 14. The breakout beyond short-term resistance is attractive, but there are two other important factors to consider.

First, the tax bill is expected to increase capital investment in equipment, which is a positive for CSCO in the near term. Second, the same tax bill is almost certain to boost corporate share-buybacks.

CSCO has been a mild buyer in the past because of shareholder preference for dividends. That means an increase in buybacks should have a greater marginal effect, and it is unlikely that the company would want to run the risk of raising the dividend too quickly.

Currently, we expect a short-term target near $46.50 where we will want to re-evaluate the trade.

‘Buy to open’ the CSCO April 45 Call (CSCO180420C00045000) for a maximum price of $1.55.

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InvestorPlace advisers John Jagerson and S. Wade Hansen, both Chartered Market Technician (CMT) designees, 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 SlingShot Trader trade and get 1 free month today by clicking here.