Arista Networks, a well-known company in cloud networking, is currently priced at $125.06. This is down from nearly $165 at the end of 2025. The stock is just above an important support level of $119.78, which has remained stable throughout the year, even during market ups and downs in August and later months.

Importance of Support Level

The support level at $119.78 has consistently drawn in buyers, indicating strong interest from larger investors. Recently, after testing this level, Arista’s stock bounced back by about 18%. This shows that buyers are still engaged, even though there hasn’t been a sharp increase. Looking ahead, two possible scenarios could unfold depending on how the stock behaves. If the stock stays above $119.78, it may aim for the $140-145 range, potentially yielding a 12-16% gain. Investors might think about entering if the price breaks above $128 with rising trading volume, as this would create a favorable risk-reward situation. On the flip side, if the stock drops below $119.78 with high trading volume, it might fall to the next support level at $106.88, suggesting a possible decrease of 15%. For traders, watching how the stock reacts around $119.78 will be crucial in deciding its next move. With Arista Networks at $125.06, we see a clear setup highlighted by the vital $119.78 support level. This current price creates specific opportunities for options traders to position themselves for a potential move in the upcoming weeks. The recent 18% rise from this support indicates buying interest, but the lack of a significant upward move points to uncertainty. For those expecting the support to hold, purchasing February or March 2026 call options with strike prices near $130 may provide an opportunity for gains if the stock reaches the $140 resistance. Another bullish tactic is to sell put credit spreads with a short strike below $119, which allows traders to profit as long as the stock remains above this key level. This method collects premium while managing risk, taking advantage of the historical strength of the support level.

Market Sentiment and Strategy

This positive outlook is reinforced by recent industry data showing that spending on 400G and 800G data center switches increased by about 25% in the fourth quarter of 2025. Additionally, analyst sentiment going into the next earnings season is optimistic, with many highlighting ongoing demand from major cloud providers for AI-related infrastructure. This fundamental support might be the push needed for buyers to protect the critical support level. However, if the stock breaks below $119.78 on increased volume, the story shifts to a bearish perspective. In this case, buying put options with $115 or $110 strike prices would be a straightforward way to profit from a potential drop towards the next support at $106.88. This would suggest that the institutional buyers who supported the price throughout 2025 have moved out. This bearish outlook becomes more plausible when we consider the broader economic situation. Reports from late 2025 indicated a slight slow down in predictions for enterprise IT spending in the first half of 2026. There’s also the market-wide volatility from August 2025 to remember, which showed how quickly the sentiment toward networking stocks can change. A drop below this well-established support level could trigger automatic selling, pushing the stock further down. Since the chart suggests a significant price move is likely, traders who are uncertain of the direction yet expect a sharp swing might consider a long straddle. This strategy involves buying both a call and a put option with the same strike price and expiration date, allowing for profits from a significant price change in either direction. This aligns with the idea that the stock is coiling for either a breakout or a breakdown. Create your live VT Markets account and start trading now.

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