What's behind big call action in Cisco

optionMONSTER

Shares of Cisco Systems had a good week but a relatively weak session on Friday while its option activity was led by a large call trade.

optionMONSTER systems show that 10,000 July 22 calls were sold for $0.53 in volume that exceeded the open interest. At the same time, 10,000 January 2014 25 calls were bought for $0.43 at less than the open interest.

This could be a roll, with the trader targeting a lower strike that is closer in time. But we rarely see a roll forward, so it seems likely that this is a diagonal spread. The latter case would take in a credit and therefore be able to profit with the stock anywhere below $22 and would generate a maximum profit with shares at that price. (See our Education section)

CSCO finished the day and week at $19.34, down 0.74 percent after trading up to $19.74. That matched the high from Sept. 6, which was the networking giant's highest price since shares gapped down at the start of May. The stock bounced off support just below $17 a month ago.

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