Cisco Systems (CSCO, $21.27, flat) will be announcing their earnings after the close and Wall Street will be eager to hear their numbers. A beat-and-raise should send shares past double-deuces while a disappointment could mean a back test to $20. Shares currently yield 3.2% so there should be some support if they slip.
Bullish traders can play the May 21 calls (CSCO130518C00021000, $0.60, down $0.05) or the June 22 calls (CSCO130622C00022000, $0.85, down $0.05) for a possible push past $22.
Bearish traders can play the June 21 puts (CSCO130622P00021000, $0.60, flat) or the May 21.50 puts (CSCO130518P00021500, $0.60, down $0.05).
The company is expected to earn 49 cents a share on revenue of $12.18 billion. There are 37 analysts that cover the stock and the company has beaten estimates for 4-straight quarters in the past year. They have a history of beating by a penny but in the last two quarters the company has come in 2 and 3 pennies ahead. If Cisco can come in a nickel ahead of estimates then shares could move 5%-10% as a match or a penny beat might not be to exciting for the suit-and-ties.
Playing options around earnings can be tricky but expect the aforementioned call and put options to be heavily traded today.