Cisco Systems Price Targets Rise as Analysts Eye Options Income Ahead of Earnings
Mark R. Hake, CFA, recommends repeating a short out-of-the-money options strategy to capture increased premiums before the August 12 earnings release.
Cisco Systems (CSCO) shares have traded in a narrow range over the past month, closing at $119.25 on July 13, a figure closely mirroring the June 18 close of $119.54. Despite the lack of significant price movement, analyst sentiment has shifted slightly bullish, with the average price target rising to $127.18 from $126.05, according to Yahoo Finance data. The company is scheduled to report its next earnings report on August 12, a catalyst that could influence the stock’s direction in the near term.
In the interim, market commentary highlights options trading strategies, specifically shorting out-of-the-money puts and calls, as a method to generate income from the current trading range. Mark R. Hake, CFA, previously suggested this play on June 19 in a Barchart article, noting that shorting the $130 call and $110 put options expiring on July 17 has proven successful. Those options are expected to expire worthless, allowing the short-seller to retain the premiums collected.
For the upcoming expiry on August 14, 2026, the author highlights higher premiums compared to the previous cycle. The $130 call has a midpoint premium of $3.43, offering a one-month covered call yield of approximately 2.876%. Similarly, the $110 put has a midpoint premium of $3.19, providing a one-month secured cash put yield of approximately 2.90%. These yields are more than double those recorded in June.
Delta ratios for the August options are higher than in June, with the put delta at 29.5% versus 18.3% and the call delta at 31.58% versus 22.97%. This implies higher variance and a greater probability of the stock hitting the strike prices, though the author maintains the yields remain attractive for short investors. Hake estimates a 12-month price target of $139.12 based on strong free cash flow prospects, suggesting the stock may be undervalued.
Most analysts are unlikely to change their outlook significantly until the next earnings release, creating a window for income-generating strategies. Barchart’s mean survey price target currently stands at $129.23, further indicating a modest upward revision in sentiment. Investors looking to capitalise on the flat trading range may find the current options premiums an efficient way to enhance returns ahead of the August 12 results.
