Pepsico (PEP, news, chart, volatility) saw bullish flow Monday. 8,750 calls and 4,240 puts traded on the day. The top two trades: 3,000 January 2010 calls at the 50 line traded offerside for $10.70 and 3,000 January 2010 calls at the 70 strike for $2.15. Shares were trading up 40 cents to $55.76 at the time. Open interest in both contracts increased by more than 3,000 contracts. Taken together, it appears to be the opening of a substantial bull call spread, where the strategist paid $8.55 in exchange for a possible payoff of $11.45 if PEP shares rally to $70 or more by January 2010 options expiration. No recent news on PEP. Earnings due out early February.
About the Author (Author Profile)
Frederic Ruffy is a well-known trader, writer, and strategist who has spent years educating investors and creating intelligent, insightful, unbiased market observations that are frequently cited by the Wall Street Journal and other financial publications. As senior analyst, Fred provides frequent and regular notes and daily updates for activity of interest.