The market is in a strong uptrend and Arista Networks stock in particular is looking quite resilient. Shares are showing signs of accumulation and currently sit above their 21-day and 50-day moving averages.
Investors interested in taking some bullish exposure can do so with much lower risk via a bull call spread.
Implied volatility is low on Arista stock, which means favoring debit spreads over credit spreads is a good idea.
Investors create a bull call spread by buying a call and then selling a further out-of-the-money call. Selling the further out-of-the-money call reduces the cost of the trade but also limits the upside.
Applying The Bull Call Spread To Arista Stock
A Dec. 19, call option with a strike price of 145 now trades around $13.20 a share, while the Dec. 19, call at 150 goes for around $11.10.
Buying the 145 call and selling the 150 call would create a bull call spread. The trade cost is $210, or the difference in the option prices multiplied by 100. The maximum potential profit would be $290, or the difference in strike prices, multiplied by 100, less the premium paid.
A bull call spread is a risk defined strategy, so if Arista stock closes below 145 on Dec. 19, the most the trade loses is the $210 premium paid. Potential gains are also capped above 150. So no matter how high Arista Networks stock rises, the highest profit for the trade comes in at $290.
The break-even price for the trade is equal to the long call strike plus the premium, which in this case would equal 147.10.
In terms of trade management, if the stock dropped below 130, or if the spread value dropped from $210 to $105, investors should consider closing early for a loss.
No. 1 Ranking And Top Scores
According to the IBD Stock Checkup, Arista Networks stock ranks first in its group. Investor's Business Daily gives it a best-possible score of 99 for both its Composite Rating and EPS Rating. Further, its Relative Strength Rating is 94.
Arista Networks provides high-performance cloud networking solutions for data centers, offering a range of Ethernet switches and routers built on diverse silicon architectures.
Its programmable Linux-based EOS platform supports major cloud frameworks and advanced virtualization protocols like VXLAN, which Arista helped develop and continues to expand.
Arista Networks reported strong second-quarter 2025 results, with revenue rising 30.4% year-over-year to $2.205 billion. Unadjusted earnings were 73 cents a share, beating analyst expectations by 8 cents.
The company highlighted record non-GAAP operating income exceeding $1 billion, driven by robust demand across its networking portfolio and efficient scalability, driven by artificial intelligence.
It's important to remember that options are risky and investors can lose 100% of their investment.
Gavin McMaster is founder and operator of Options Trading IQ, a website offering instruction on how to buy and sell options. Follow him on X/Twitter at @OptiontradinIQ.
