DailyPlay – Opening Trade (PEP) – January 23, 2025

PEP Bullish Opening Trade Signal

Investment Rationale

PepsiCo, Inc. (PEP) has recently reached oversold conditions on both daily and weekly timeframes, indicating a potential for a strong rally ahead.

From a fundamental perspective, PEP appears modestly undervalued. 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 industry, with growth expectations in line with the sector. Although expected earnings growth is slightly below the industry average, PepsiCo’s revenue growth and net margins remain strong. The stock also offers an attractive dividend yield, providing value for income-seeking investors. The company is set to report earnings on Tuesday, February 4, before the market opens.

PEP – Daily

Trade Details

Strategy Details

Strategy: Long Call Diagonal Spread

Direction: Bullish Call Diagonal Spread

Details: Buy to Open 5 PEP Jan 31/Feb 14 $145/$150 Call Diagonal Spreads @ $4.40 Debit per Contract.

Total Risk: This trade has a max risk of $2,200 (5 Contracts x $440) based on a hypothetical $100k portfolio risking 2%. We suggest risking only 2% of the value of your portfolio and divide it by $440 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 after being oversold.

1M/6M Trends: Bearish/Bearish

Relative Strength: 3/10

OptionsPlay Score: 100

Stop Loss: @ $2.20 (50% loss 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