Cisco Systems' Trading Range Yields Attractive Returns Through Shorting OTM Puts and Calls

Cisco Systems (CSCO) is expected to report its fiscal Q4 earnings on August 12, after the market close. The stock has been trading in a range for some time now and analysts have raised their price targets.

Shorting one-month out-of-the-money (OTM) puts and calls is an attractive play that has worked well for investors. For example, shorting the Aug 14 expiry $130 call option when CSCO was trading at $119.25 would have yielded a profit of $2.40 if closed out now.

The same applies to shorting the $110 put for the same expiry, which dropped from $3.19 to 98 cents, giving the short seller a $2.21 profit.