(CSCO Feb 10 '12 $18 Put w) .04 play?

Discussion in 'Options' started by noob_trad3r, Feb 8, 2012.

  1. 100 bucks for a limited risk play on earnings today? What do you think, at least IV is not so high like group on. i.e.: Go long 22-25 puts for 4 cents. It would be like the Nickel slots.
  2. if it were me I would try by using the feb monthly options or the march ones, that way you can recover some premium if you're wrong. I mean that's just me but if you're using it purely as an options spec play then I guess it doesn't matter as much.
  3. The stock would have to drop by over 10% in 2 trading days for you to have intrinsic value in the options. If the share price goes down $3 or 15%, you will have roughly 33 times your money. Earnings would have to be pretty bad for this to happen. But if you want to have some fun and ask me if I would prefer what you are suggesting over the casino, I would say yes. :)

    The $19 strike are trading 13-18 cents today. Only a 5% drop to be in the money intrinsicaly, but a lot more upfront for the options.
  4. the weekly's imply a reaction about 3x the typical magnitude of CSCO non earnings moves- or about a 17% chance of a move lower than 18.5- so it's a long shot (and thats why the puts are cheap)- actually I see them 6cent at 8cent right now.
  5. There have been a big swing on earnings, so it makes for an interesting gamble.


    The one exception in the last six quarters was in August 2011, when the shares gained 16 percent the day after results.

    Wall Street expects Cisco to report a stable quarter, buoyed in part by improving enterprise demand in the United States.

    Cisco has outperformed its peers this year, rallying 11.7 percent, and options activity has been tilted to the bullish side.

    Heading into Wednesday's earnings report, investors bought 3.61 calls for every put on three U.S. options exchanges as new positions over the past 10 trading sessions, according to Schaeffer's data. That gauge clocked in higher than 79 percent of the readings taken during the past year.
  6. Who is your broker?

    I see bid 3 ask 4

    I am going to wait and see if it does bid 2 ask 3

    maybe try for 3 cents.

    I put in a limit order for 30 contracts at 3 cents.
  7. He is probably looking at the options that expire on the 18th not the 10th of Feb. Those are indeed trading at 6-8 cents.
  8. For $100 bucks? why not play 1 21 call and 1 20 put for $79 plus commish. Saves you $10 for drinks afterwards :D