Bet on this tech giant to get back to its old highs: Trader

The technology sector has some of the best-performing stocks in the market, and one trader has singled out an old tech name for a trade.

Cisco is up more than 17 percent year to date, rising off of what Todd Gordon of TradingAnalysis.com sees as a solid new business model.

"Cisco has made a great adjustment from the hardware router over to more of a software-based cloud model," he said Tuesday on CNBC's "Trading Nation." "They've made that transition quite well."

In fact, looking at a chart of Cisco dating to 2006, Gordon points out that the stock could be retesting highs it hasn't seen for years.

"We've broken from the 2010 [high] to the 2016 [high] right at about the $30 mark," said Gordon. "It looks like we want to go back up and retest the pre-credit crisis highs right around mid-2007."

Gordon wants to buy the October 30-strike calls for $1.90 per share. This represents the right to buy the now-$31.80 stock for $30 per share at October expiration. Notably, this option is what pros would call "in the money," since if the option expired today, it would have value.

"What we want to do is buy some in-the-money calls and have basically a long stock position but use the options market's leverage," Gordon explained.

If Cisco looks like it will fall below $30 on October expiration, Gordon plans to sell the option and get out of the trade.


Trades to Watch

Trader Bios


Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Sara Eisen

Sara Eisen joined CNBC in December 2013 as a correspondent, focusing on the global consumer. She is co-anchor of the 10AM ET hour of CNBC's "Squawk on the Street" (M-F, 9AM-11AM ET), broadcast from Post 9 at the New York Stock Exchange.

In March 2018, Eisen was named co-anchor of CNBC's "Power Lunch" (M-F, 1PM-3PM ET), which broadcasts from CNBC Global Headquarters in Englewood Cliffs, N.J.

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