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 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.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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