Cisco is in a consolidation phase and is stuck in a daily triangle.
RSI and Stochastics are slightly bearish in a neutral zone. Let’s sell the Nov16 32/33 Call Spread (expiry November 18) to cash in some premium with limited upside risk.
Source: Saxo Bank
Management and risk descriptionEntry:
Sell CSCO Nov16 32/33 Call Spread at $0.31
Sell CSCO Nov16 32 Call at $0.58
Buy CSCO Nov16 33 Call at $0.27
Maximum Profit at expiry is limited
Maximum profit at expiry is limited to the premium received $0.31
Maximum Loss at expiry is limited
Maximum loss is: long strike price – short strike price – premium received
33 – 32 – 0.31 = $0.69
Note that you maximum loss will be equal to the margin you need to post the trade
Return on Investment at expiry if the market closes at 32 or below
= Premium received/margin posted X 100
Target at expiry:
32 or below.
— Edited by Martin O'Rourke
Non-independent investment research disclaimer applies. Read more