Making Money Out Of The Volatility In Cisco (CSCO)
November 02, 2009 10:21 AM
How do you make some money from the options volatility in Cisco Systems, Inc. (NASDAQ: CSCO)? As Cisco gets ready to announce its 1st quarter earnings for the fiscal 2010 earnings on Wednesday, Barron’s suggests one idea.
Barron’s Steven Sears did some back ground research and found that Cisco’s 1 month implied volatility is at a premium to its historical volatility. Even when compared to the implied volatility of the NASDAQ – 100 index, it is up sharply. Sears infers that the options market is anticipating a substantial rise in Cisco’s stock after it declares its earnings.
Goldman Sachs’ (NYSE: GS) analysts have a different strategy. Its analysts, Stuart Kaiser and Maria Grant are suggesting that by selling a November $23 put and November $25 call, investors can still come out trumps if options volatility declines.
