RADVISION: Stock & Options Alert (RVSN, CSCO)

Posted in General, Options 
October 30th, 2009

RADVISION Ltd. (NASDAQ: RVSN) is already trading higher this morning.  The company’s earnings yesterday morning were $0.13 non-GAAP EPS and $20.4 million in revenues versus Thomson Reuters figures.  And the guidance for Q4 was listed as $0.17 non-GAAP EPS and $21.5 million in revenues.  That guidance may be mixed, but it does not signal an imminent drop off.  We have also seen upgrades from Morgan Keegan and from Oscar Gruss. But this morning’s boost comes on the heels of reports from overseas that Cisco Systems Inc. (NASDAQ: CSCO) may walk away from the $3.1 billion acquisition of Tandberg.

If you will recall, Tel Aviv, Israel-based RADVISION shares fell from over $9.00 down to about $6.00 at the end of September when this Tandberg deal was announced by Cisco.  Cisco is RADVision’s largest customer, and if Cisco is not going to buying a larger company like Tandberg it may either look elsewhere or it may just keep its pacts with RADVision.  That may not offer key certainty by any stretch with “may” and with the hypothetical situations, but it leaves the upside for RADVision higher than it did.  It is also after the company’s earnings and its guidance.

Where this gets interesting is in the NOV and DEC $7.50 CALLS for a de-leveraged trade.  In December, we have seen only 10 contracts trade hands in the DEC-2009 $7.50 CALLS versus a prior open interest of 1,150 contracts.  And in November, we have seen only 30 contracts trade in the NOV-2009 $7.50 CALLS versus a prior open interest of 68 contracts.  The last price traded on the NOV CALLS was $0.25 and the last on the DEC CALLS was $0.15 and under the current market of $0.25 bid X $0.40 ask per contract.

Either way, with a 5.5% gain to $6.34 today traders are looking at the stock.  Volume is already twice-normal at over 420,000 shares as of 10:46 AM EST. That is already above yesterday’s 358,000 shares traded and well above the 100,000 or so seen on many days.  Some might also look at an ‘implied floor’ of about $5.60 seen from after the Cisco-Tandberg deal announcement right before earnings this week.

Reports do not constitute any definite outcomes.  But that won’t keep traders from speculating either way.

OCTOBER 30, 2009

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