Cisco Systems Taps Record High Before Earnings

Shares of Cisco Systems Inc (NASDAQ:CSCO) are trading 0.3% lower at $98.44, as investors gear up for the company's fiscal third-quarter report, due out after the close tomorrow, May 13. Zacks Research is anticipating earnings per share (EPS) of $1.04 on revenue of $15.58 billion, a 10.1% jump in revenue from the same quarter a year ago.

Over the past two years, CSCO has had a mixed reaction to earnings, finishing the next session lower after four of the last eight reports, including a 12.3% drop in February. The stock averaged a move of 4.6% in this time frame, regardless of direction. This time around, a much larger-than-expected 11.6% shift is anticipated by options traders.

Earlier today, CSCO managed to tap a fresh record high of $99.93 before paring gains. The shares are tacking on more gains to an already healthy 27% year-to-date gain, enjoying long-term support from the ascending 100-day moving average since last May.

Options traders are making noise today, with 38,000 calls exchanged already, more than double the amount of puts and higher than the average daily pace. The May 100 call is the looking to be the most popular, where selling activity is present.

While the remaining are bullish, ten of the 25 brokerages in coverage sport a tepid "hold" recommendation, leaving ample room for bull notes should earnings manage to impress.

The stock's Schaeffer's Volatility Scorecard (SVS) comes in at 33 out of 100. In other words, the shares have consistently realized lower volatility than its options have priced in over the past 12 months -- a boon for premium sellers.