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Cisco Call Options Not Giving Away Earnings Expectations

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Options trading in networking leviathan


(CSCO) - Get Cisco Systems Inc. Report

was heavy Monday but like almost everything else involving tech stocks, provided little consensus on where the stock was headed.

Typically, in trading ahead of earnings reports, options activity can point to a developing consensus on how a company will report. Cisco is set to post earnings after Tuesday's close, and today the stock slumped $1.50 to $34.06. The

First Call/Thomson Financial

33-analyst consensus estimate calls for the company to earn 19 cents a share in its fiscal second quarter. A three-analyst First Call consensus calls for the company to post $7.223 billion in revenue.

Prices for Cisco options have perked up along with volume, and some market pros are expecting prices to continue to rise as earnings draw even closer amid the climate of uncertainty. Prices for options on a company's stock generally rise ahead of the company's earnings report.

Cisco is a tech bellwether and its earnings and revenue numbers have ramifications for the entire technology sector. Paul Foster of

said it'll be key to see what guidance Cisco CEO and President John Chambers gives for the summer and fall.

Several decent-sized blocks of Cisco February 35

calls traded this morning on the

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American Stock Exchange

, action apparently initiated by buyers. Two 3,000-contract trades and a 1,000-contract trade took place relatively early in the session on the Amex but the February 35 calls' price slipped 11/16 ($68.75) to 1 13/16 ($181.25), on volume of nearly 16,000 contracts.

James Quinn of


, the designated primary market maker of Cisco options at the

Chicago Board Options Exchange

, said there were buyers of both

puts and calls in the February 35 strike. He said there was also buying in April options, although on a smaller scale.

Overall volume in the February 35 strike price, however, was tilted to calls. Consolidated volume for the February 35 calls totaled nearly 24,000 contracts. Consolidated volume in the February 35 puts was a little more than 7,000 contracts. On the CBOE, the February 35 puts were up 13/16 ($81.25) to 2 7/8 ($287.50).


Options Industry Council

said equity-options volume reached a record in January, with 73.3 million contracts trading, breaking the previous record of 70.1 million contracts set in October. January volume was 30% higher than in the year-ago period.

Equity-option open interest (the total number of options contracts not yet exercised or allowed to expire) also hit record levels. On Jan. 19, equity open interest stood at 80.4 million contracts, breaking the previous record set on Oct. 20 of 74.9 million contracts.

Average daily equity-options volume in January was 3.49 million contracts, up 24% from the year-ago period.