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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.)
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