Cisco shares fall 9.5% after earnings; options outlook in focus

Cisco Systems Inc. shares fell 9.5% on Friday after the networking giant reported quarterly results that missed analyst expectations, prompting options traders to reassess near-term price expectations.

The decline, which followed the company’s earnings release, pushed implied volatility higher as investors positioned for potential volatility in the stock. Options activity indicated increased demand for both puts and calls, suggesting uncertainty over Cisco’s near-term direction despite the broader market’s stability.

Analysts noted that the post-earnings drop reflected concerns over weaker-than-expected demand in key segments, though some highlighted long-term growth drivers as still intact. The company’s guidance for the current quarter also contributed to the cautious sentiment, with revenue projections falling short of some estimates.

Options pricing data showed elevated implied volatility levels, particularly for short-dated contracts, signaling expectations of continued price swings in the near term. Traders priced in a higher probability of Cisco shares testing recent lows, though some bullish bets remained in play for a potential rebound.

Cisco, a bellwether for enterprise technology spending, has faced macroeconomic headwinds in recent quarters, including reduced corporate IT budgets and slower cloud infrastructure investments. The latest results underscored the challenges in navigating a cautious enterprise spending environment.

The stock’s decline extended losses from earlier in the week, pushing its year-to-date performance further into negative territory. Options market activity will be closely watched in the coming sessions as investors gauge whether the selloff has run its course or if further downside pressure is likely.