Cisco is set to report earnings after the bell Wednesday, and analysts don't look for much—both earnings and revenue are expected to drop year over year. But one firm is making a huge options wager that the results will be even worse than investors forecast.
On Tuesday, a major options trader bought 20,000 February 21/20 one-by-two put spreads for about 8 cents each. This represents a bet that Cisco will be trading between $20 and $20.92 by the end of next week, or 8 percent to 12 percent below current levels. It thus implies an expectation that Cisco's earnings report will disappoint.