Next week key technology and retail names are set to release earnings, and traders are making big bets ahead of those reports.
This week bullish investors bought more than 11,000 Cisco calls with a November 34.50 strike price. The San Jose, California-based company is scheduled to report earnings Wednesday after the bell. The calls expire next Friday and so as long as the stock trades above $34.50 by then, the investors can exercise their right to buy the stock and collect a profit (minus their cost to purchase the option).
Options can be a less costly way to play the market because if the stock fails to reach the strike price, the investor is only out the price he or she paid for the option. But they do hold big risks too since they are just a contract and so their value can go to zero quickly.