Cisco Systems, Inc. (CSCO) is a company that focuses on networking hardware, software, cybersecurity, and cloud solutions. It is listed on the NASDAQ. The company experienced a significant decline from March 2000 to October 2022, dropping 90% from its peak of around $82 until it reached $8. Since October 2022, CSCO has recovered more than 90%, but it still hasn’t reached its previous high. From an Elliott Wave perspective, the cycle starting in October 2002 looks like an impulse wave. Waves (1) and (2) ended in September 2023 and August 2024, respectively. A pullback happened for wave 2 of (3) into April 2025, which marked the beginning of a bullish market phase. Wave ((1)) of 3 rose from the low in April 2025 to its peak in August 2025, followed by a correction in wave ((2)). The current pullback resembles a zigzag pattern, indicating a buying zone between $63.98 and $59.72. This area presents opportunities for substantial gains, as wave ((3)) of 3 could extend to a range of $70 to $97. A recommended strategy is to buy near $64, with a stop-loss at $59, aiming for a risk-to-reward ratio of 1:3 to 1:6. We view Cisco’s current pullback as an excellent entry point within a long-term bullish trend. The stock has been correcting since its peak in August 2025 and is now near a crucial support area between $63.98 and $59.72. This zone is ideal for considering bullish derivative strategies. This technical situation is backed by strong fundamentals. In its last earnings report, Cisco exceeded expectations due to high demand for its AI-driven networking hardware. Recent forecasts predict a significant rise in enterprise IT spending on cybersecurity and cloud infrastructure through 2026, benefiting Cisco’s main business areas. The broader market conditions also support this outlook, as the Fed has recently adopted a neutral-dovish stance. The latest Consumer Price Index (CPI) data from September showed inflation slowing to 3.1%, lowering the odds of further interest rate hikes, which benefits established tech companies. This backdrop is favorable for stocks to continue their upward trend after the recent market-wide correction. For derivatives traders, there are straightforward strategies to consider in the coming weeks. Buying call options that expire in early 2026 allows investors to participate in the expected rally towards the $70 target and beyond. Another option is selling cash-secured puts with a strike price around $60, which can help collect premium while setting a lower entry point. It’s important to manage risk around the $59 level, which is crucial for this bullish outlook. A significant drop below this price could invalidate the short-term upward scenario and trigger stop-loss orders. We also note that implied volatility has increased during this pullback, making options premiums a bit higher but also offering better returns for those selling options.

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