Learn the trade here. Make it on tradeMONSTER

Options Trading News

October 29, 2013  Tue 5:16 AM CT

PEP: SEE CHART GET CHAIN FIND STRATEGIES
Bulls were piling into Pepsico yesterday for the second session in a row.

On Friday our scanners detected upside action in the January 87.50 calls, and now traders are shortening their time horizon. optionMONSTER's Heat Seeker system found heavy buying in the December 90 calls, where more than 13,300 traded for $0.11 to $0.29 yesterday in volume that dwarfed the previous open interest of just 15 contracts.

These long calls lock in the price where traders can purchase the stock through mid-December no matter how far it might climb, with the potential to provide significant upside leverage. They could be sold earlier at a profit if premiums rise with a rally before then, but the contracts will expire worthless if shares remain below $90. (See our Education section)

PEP gained 1.51 percent yesterday to close at $84.61. The snack and beverage giant bounced off support at its 200-day moving average around $79 early this month and accelerated higher after reporting third-quarter results about a week later.

Total option volume in Pepsico was just shy of 49,000 contracts, 7 times its daily average for the last month. Overall calls outnumbered puts by more than 15 to 1, reflecting the session's bullish bias.

(A version of this post appeared on InsideOptions Pro yesterday.)
Share this article with your friends


Related Stories

PEP

Trader sees Pepsico holding gains

August 29, 2014

The beverage and snack company reached an all-time high on Tuesday, and a large trader is betting that PepsiCo will hold firm in coming weeks.

Premium Services

Education & Strategy

It's all skewed up

Most new option traders know little about implied volatility, and learn the hard way. Today we want to help you...

View more education articles »
optionMONSTER stockMONSTER tradeMONSTER