Cisco Systems Reported Lower FCF and Margins - Has CSCO Stock Peaked?

Cisco Systems (CSCO) reported lower free cash flow compared to last year, as well as lower FCF margins. Nevertheless, CSCO's fair value could be 16% higher based on significantly higher revenue forecasts. Value buyers are shorting near-term CSCO puts to set a lower buy-in price and shorting covered calls in case it stays flat or rises slightly.

CSCO was up over 1.4% on Friday, May 15, at $117.59 in midday trading. That is a peak price, so value investors are looking for a lower entry point. One way to do this is to short out-of-the-money (OTM) puts and calls. This article will show how to do this.