A Range Play on Cisco's Earnings

If John Chambers used a Magic 8-Ball to answer questions on the earnings conference calls, it would be just as well received as his actual answers. I actually like the look of Cisco Systems (CSCO) into earnings.

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I am putting on a play here which is looking for a range and does hold some risk with open-ended shares. On the upside, I am long the September $18 and $19 calls while shorting 3x August $19 calls. The upside gap fill looks to be around $18.50, so I want to build in some room in case Cisco grabs some momentum. If I were looking for a hedge, then I would be buying an August $17-16-15 unbalanced put butterfly that was in a long one $17 put short three $16 puts and long two $15 puts. The total cost of this trade will run between $0.55 and $0.60. Obviously, there is risk if Cisco runs well over $19, falls well under $16 or does very little on earnings....236 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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