Goldman (NYSE:GS) Says Buy Cisco (Nasdaq:CSCO) Calls Before Earnings Report

Goldman Sachs (NYSE:GS) exhorted traders to buy calls on Cisco (Nasdaq:CSCO) before their second-quarter earnings report next week.

Goldman, said in a note, “Our analyst thinks that sentiment has moved too negative into the quarter and guidance is achievable. With Street estimates below Cisco’s guidance, a ‘not as bad as feared’ quarter is likely a positive catalyst for the stock.”

John Marshall and Maria Grant, equity derivatives strategists at the financial giant, said traders should buy a call spread, buying one Cisco February $22 call for every two February $23 calls sold.

The call spread will generate profits if the shares close between $22.12 and $23.88 at expiration on Feb. 18, according to the note. Traders will achieve top profits if Cisco closes around $23 in the investing scenario suggested.

Cisco closed Wednesday at $21.62, gaining $0.15, or 0.70 percent.