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DailyPlay – Opening Trade (PEP) – February 13, 2025

PEP Bullish Opening Trade Signal

Investment Rationale

PepsiCo, Inc. (PEP) has recently reached oversold conditions and is approaching a strong support level after the company announced earnings.  

PepsiCo reported mixed quarterly results, with earnings surpassing Wall Street’s expectations but revenue falling slightly short. The company posted adjusted earnings per share of $1.96, beating the consensus estimate of $1.94, while revenue came in at $27.78 billion, just below the expected $27.89 billion.  

From a fundamental perspective, PEP appears modestly undervalued. Despite the revenue miss, PepsiCo posted fourth-quarter net income attributable to the company of $1.52 billion, or $1.11 per share, up from $1.3 billion, or 94 cents per share, a year earlier.  

The stock trades at a forward price-to-earnings ratio of 17.29x, compared to the industry average of 19.82x, representing a discount to its peers, with growth expectations in line with the sector. While expected earnings growth is slightly below the industry average, PepsiCo continues to demonstrate strong revenue growth and solid net margins.

PEP – Daily

Trade Details

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish Credit Spread

Details: Sell to Open 5 Contracts PEP March 28 $140/$135 Put Vertical Spreads @ $1.16 Credit per Contract.

Total Risk: This trade has a max risk of $1,915 (5 Contracts x $383) based on a hypothetical $100k portfolio risking 2%. We suggest risking only 2% of the value of your portfolio and divide it by $383 to select the # contracts for your portfolio.

Counter Trend Signal: This is a bullish trade on a stock that is expected to bounce off recent support.

1M/6M Trends: Bearish/Bearish

Relative Strength: 2/10

OptionsPlay Score: 108

Stop Loss: @ $2.32 (100% loss to value of premium)

View PEP Trade

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that whenever there is a multi-leg option strategy, it should be entered as a single trade. 

PLEASE NOTE that these prices are based on Wednesday ‘s closing prices. Should the underlying move significantly during the pre-market hours, we will likely adjust the strikes and prices to reflect a more accurate trade entry. 

View PEP Trade

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Tony Zhang