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We are opening a new bearish trade on Cisco Systems (NASDAQ:CSCO). As the market pulls back from its recent high, technology stocks seem to be bearing a large share of the selling pressure as traders take profits following a multi-week bullish rebound.

CSCO has not been able to avoid the profit-taking, and with it setting a new lower high at $44 (which is below its early March high of ~$46), we anticipate the stock is going to be dropping down to retest support at $43 (the high price the stock reached in late January and the support level that formed in late February after the stock gapped higher in the aftermath of its February earnings announcement).

We expect this move to happen quickly and for implied volatility levels to rise as we get closer to the company’s earnings announcement on May 16, after market close.

‘Buy to open’ the CSCO June 43 Put (CSCO180615P00043000) for a maximum price of $1.40.

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