CIS trade ideas
CSCO covered strangleSold the OCT 20 30/32, ~ 30 deltas, 58 days, @ 40% IV Rank now, (I missed my chance selling when the IV was higher before earnings )
I'm sitting on 3 lots of stock here with 31.64 cost basis. I could have just sold the 32 call against my stock position, but it seems to make more sense to sell the strangle as it brings in more premium and both the call & put won't be assigned. I'm open to acquiring more CSCO stock at 30. A number of fundamental bullish factors should provide support the stock price:
- Free cash flow yield of 4.6%
- Dividend yield of 3.75%, payout ratio 56%
- Both CFRA and Trefis give a higher 'fair value' around $33, Credit Suisse "outperform" rating
- Valued based on 2.43 operating earnings and 5% earnings growth rate over next 3 years.
Cisco going long next daysWe will see a small moment here!
The earnings levels and the multiframe analysis shows us this long position.
CSCO Follow Through Head and Shoulders PatternThis play is a decent look in our opinions. We aren't concerned about the fundamentals so much as stated on the chart. We see an inverse head-and-shoulders pattern appearing. It's a slower mover so the consolidation can take a bit of time. After that period is over, we do see a potential gap up in the long run. Maybe it be an announcement of a spinoff that would be needed in the near future, in our opinions. Or simply just buying value. This seems to be a large cap that can give a smoothish ride, if there's even such a thing in this game!
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CSCO looking to move back upCSCO created an ugly gap a short while ago due to an earnings report, however I feel investors overreacted so I placed buys down there. Volume at the bottom was excellent and we got a nice wick on daily.
With volume increasing, I think that CSCO is now ready to move back up towards the sell zone, or to at least fill the gap.
Fundamentally speaking, I think companies with interests in cybersecurity are huge buys right now - we have been seeing a web startup bubble - but cybersec is still relatively new and has a lot of room for growth IMHO.
$CSCO's rally from $00.08 to $80.00 in log-scale from 1990-2000$10,000 invested at $0.08 would grow to $1,000,000.
This chart is an amazing run that everyone should have a look at.
When we look at the chart of $BTCUSD or other monster gains in stocks or in any market, we often see 75% retracements and many 50% retracements, but only 1 50% retracement in this chart of $CSCO.
I remember the top very well and not many could believe that it would top since it had been rallying so pervasively for 10 years.
Whenever you think that anything can keep growing forever, remember this chart to remind yourself to always look at your investments rationally.
Cisco peaked here and hasn't made a new high since, for 17 years now.
Why did $CSCO peak right then?
Research it and see if you can find out why.
Tim
12:18AM May 31, 2017
Jump on earningsJust want to give a shout out! I believe this stock will rise post earnings results.
At Least A 1% Drop For CiscoOn April 5, 2017, CISCO Systems Inc. ( NASDAQ:CSCO ) crossed below its 50 day moving average (MA). Historically this has occurred 236 times and the stock does not always drop. The stock has a median loss of 2.851% and a maximum loss of 30.080% over the next 5 trading days.
When we take a look at other technical indicators, the relative strength index (RSI) is at 34.1632. RSI tends to determine overbought and oversold levels as well as likelihood of price swings. I personally use anything above 75 as overbought and anything under 25 as oversold. The current reading declares the stock is trending down and will quickly make it to oversold territory within the next 5 trading days.
The true strength index (TSI) is currently 23.4246. The TSI determines overbought/oversold levels and/or current trend. I solely use this as an indicator of trend as overbought and oversold levels vary. The TSI is double smoothed in its calculation and is a great indicator of upward and downward movement. The current direction declares the stock is moving down.
The positive vortex indicator (VI) is at 1.1365. When the positive level is higher than 1 and higher than the negative indicator, the overall price action is moving upward. When the negative level is higher than 1 and higher than the positive indicator, the overall price action is moving downward. The current reading declares the stock is moving down.
The stochastic oscillator K value is 17.5800 and D value is 17.2248. This is a cyclical oscillator that is highly accurate and can be used to identify overbought/oversold levels as well as pending reversals. I personally use anything above 80 as overbought and below 20 as oversold. When the K value is higher than the D value, the stock is trending up. When the D value is higher that the K value the stock is trending down. The current reading declares the stock has been moving down, but is due to move up again in the near future.
Considering the moving average crossover, RSI, TSI, VI and stochastic levels, the overall direction appears to be heading down. Based on historical movement compared to current levels and the current position, the stock could lose another 1.1% over the next 5 trading days. The stock will revisit a previous resistance level around 32.60 which could turn into new support. A possible reversal at this point could also occur due to the Stochastic level in the oversold level. However, a quick drop could cause the stock to drop to the Macro support level around 31-31.50 before it reverses up again.
CSCOPrice pushed up through BB and then below them. Then price moved below 20 MA. This gives me reason to believe a significant short movement may be imminent.
Therefore, I bought a 30 day put option (Apr17) on the movement.
I stand to lose $108.49 if the option does not fulfill the movement I anticipate.
Take profit target is at 200 MA.
