Cisco Systems (CSCO) PriceWatch Alert Technicals Showing Bullish

Posted on Monday, August 18, 2008 8:07 AM

Cisco Systems (NasdaqNM: CSCO) ended the last trading session at $24.91. So far the stock has hit a 52-week low of $20.56 and 52-week high of $34.24. Cisco Systems stock has been showing support around 24.38 and resistance in the 25.52 range. Technical indicators for the stock are Bullish and S&P gives CSCO a neutral 3 STAR (out of 5) hold rating. CSCO appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Jan '09 25 covered call (CYQ AE) for a net debit in the $22.81 area. That is also the break even stock price for this trade. This covered call has a 152 day duration, provides 8.43% downside protection and a 9.60% assigned return rate for a 23.06% annualized return rate (comparison purposes only). A lower cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the CSCO Jan '09 22.50 Call (CYQ AX) and selling the Jan '09 25 call (CYQ AE) for a $1.60 debit. The trade has a 152 day life and would provide 3.25% downside protection and a 56.25% assigned return rate for a 135.00% annualized return rate (for comparison purposes only). Cisco Systems does not pay dividends at this time. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]