PepsiCo Inc is a profitable Beverages (Nonalcoholic) company
that trades on the NYSE. PepsiCo, Inc. (PepsiCo) is a global
beverage, snack and food company. The Company manufactures,
markets and sells a range of salty, convenient, sweet and
grain-based snacks, carbonated and non-carbonated beverages
and foods approximately 200 countries, with its operations
in North America, Mexico and the United Kingdom. The Company
is organized into three business units: PepsiCo Americas
Foods, which includes Frito-Lay North America, Quaker Foods
North America and all of its Latin American food and snack
businesses, including its Sabritas and Gamesa businesses in
Mexico; PepsiCo Americas Beverages, which includes PepsiCo
Beverages North America and all of its Latin American
beverage businesses, and PepsiCo International, which
includes all PepsiCo businesses in the United Kingdom,
Europe, Asia, Middle East and Africa. The Company's three
business units were organized in six segments: FLNA, QFNA,
LAF, PAB, United Kingdom & Europe, and Middle East, Africa &
Asia.
PEPSICO INC (PEP) - 2010 - Year 2
ONGOING EVALUATION
& TRADE
While Coca
Cola may be number one, PepsiCo is a very diversified
company with great earnings, lots of future potential and an
excellent dividend. PepsiCo stock is not very volatile and as
such the expected return is 10% for the year. This is a long term trade.
On any down turn in the stock I will add to my positions.
GOAL: 10% return through option selling. Collecting the
income to reduce my own capital requirements when eventually
assigned shares. In other words I want to use other people's
money to eventually own shares.
OBJECTIVE: Selling puts for income. Buy stock on dips for
short term selling. Once assigned
shares I will sell covered calls.
Should you find my strategy and ongoing evaluation of
this trade of value I hope you will consider a tip
for the time I spend detailing out this trade.
I have set up a Paypal account for those
who would like to donate. Thank you in advance. Remember, nothing on my site is financial advice.
They are just my ideas and opinions. Investing is risky and losses can be large. Trade
at your own risk.
Read the
terms of use
YEAR 1: 2009 - Trade Commenced Feb 11 2009 Goal for 2009:
9% (11 months)
Strategy: Sell Puts Until Assigned
Capital In Use At End Of 2009
23,000.00
Income Earned in 2009 (5 months)
3807.50
Return On Capital in 2009 (5 months)
16.5%
YEAR 2: 2010 Goal for 2010: 10%
Strategy: Sell Puts Until Assigned
Capital In Use At End
Of 2010
61,250.00
Income Earned in 2010
5455.25
Return On Capital For
2010
8.9%
YEAR - 2: 2010
TRADE COMMENCED Feb 11 2009
GOAL FOR 2010:
10%
ONGOING STRATEGY -
SELLING PUTS UNTIL ASSIGNED
Jan 15 10
62.29
BTC 4 Puts Feb 57.50 @ .20
12.00
(92.00)
(0.34)
3715.50
Jan 15 10
62.29
STO 4 Puts Feb 60 @ .65
12.00
24012.00
248.00
1.03
3963.50
Feb 4 10
59.64
BTC 4 Puts Feb 60 @ 1.15
12.00
(472.00)
(1.96)
3491.50
Feb 4 10
59.64
STO 4 Puts Mar 60 @ 2.17
12.00
24012.00
856.00
3.56
4347.50
Mar 19 2010: It
looks like the consolidation of Pepsico stock at the $60 level
is finished and Pepsi stock prices are moving higher. I am holding Apr
55 puts and Mar 60 puts which I am sure will all expire
worthless. This is the beauty of having margin available or
cash available. I will sell 8 Puts for PepsiCo at April
65 as I think stock could reach there before April. Once the
stock reaches 65, I will be moving to 67.50. Should the
stock pull back I believe it will hold at around the 60
level and I will roll my puts until the stock moves back up
to my put. .
Mar 8 10
63.95
STO 8 Puts Apr 65 @ 1.40
17.00
52017.00
1103.00
2.12
5450.50
Mar 19 10
66.28
BTC Apr 55 @ .06
12.00
(52.00)
(0.01)
5389.50
Mar 19 10
66.56
Expiry: 4 NP Mar 60 expired
Mar 19 2010: (there
are 2 charts with this review. Please read to the end of the
second chart) After consolidating between December and the
end of Feb 2010, Pepsi stock is poised to move higher. It is
well above it's 50 day moving average. With the news of the
increase in the dividend, Pepsi stock continues to make a great
trade. On Mar 8 just a few days ago I sold the April 65 put.
The stock has moved beyond that and continues to press
higher. I think at this stage the stock is a little ahead of
itself, but even at 66.44 PepsiCo stock is trading at 17.62
times earnings while its main rival Coca Cola is trading at
18.72 times earnings. (Pepsi Versus Coke) So where could PepsiCo
stock prices be heading?
Let's look back at the past 3 years for some guidance.
Looking at the 3 year chart below I have highlighted the
stock at 69.00 when it fell in Sep 2008. It's obvious to me
that we could retest the 70 level again. Right now 67.50
puts are looking very attractive. The 65 level has had
support for some time but with the crash in 2008 that
support was broken and the new support I believe is in the
$60 range unless the stock can stay at the $70 level for
some time. If the stock can stay around 66.00 my next move
will be to sell the $67.50 puts as I think the stock could
easily move above that price. As well $67.50 puts is in the
middle of the 65 to 70 range, which I think could be a good
point for the next move higher
My strategy now will be to
stay mid-range with Pepsico Stock and try to achieve
more premium, but to close the puts more often
and roll more often to stay better connected to
the stock. I believe Pepsico, with their recent
announcement of increasing the health quality of
their snack products through a reduction in
dyes, salt and other harmful ingredients, bodes
well for this company's future growth. With the
cash built up over the past year, I can pretty
well be guaranteed that my break even will be
below any assigned strike should that occur
prematurely. .
Apr 16 10
66.21
STO 8 Puts May 65 @ .83
17.00
52017.00
664.00
1.27
6053.50
Apr 16 10
66.14
Expiry: 8 Puts Apr 65 expired
May 10 10
66.41
BTC 8 NP May 65 @ .41
17.00
(345.00)
(0.66)
5708.00
May 21 10
62.33
STO 8 NP Jun 57.50 @ .70
17.00
46017.00
543.00
1.17
6251.00
Jun 18 10
64.08
Expiry: 8 NP JUN 57.50 expired
Jun 23 10
62.35
STO 8 NP AUG 60 @ 1.20
17.00
48017.00
943.00
1.96
7194.00
Jul 29 2010: I
am slow to the trigger on this one. I should have sold my
62.50 puts a few days ago when the 10-20-30 indicated an
uptrend underway. This is why I try to stay with just a few
stocks. I should have had time to check this stock out, but
I was too busy and missed the opportunity to sell until
today. It's easy to see the range for Pepsi stock prices. Like so many
consumer (all other stocks) stocks, Pepsi stock had a great rise
up throughout 2009 and then sideways. Now I can see
the range of 65 to a low of around 60 on the stock. So with
any selling I would expect to see this stock fall to around
60 and in a rally it should work its way back to 65.00.
Therefore the best spot for me at the moment is 62.50 so I
can garner as much premium as possible. Remember that the
goal is to eventually own shares in Pepsi, but I would
prefer to use other people's capital to do that. This means
I will continue to sell puts for probably a couple
more years depending on how much I can raise..
Jul 29 10
65.10
STO 5 NP SEP 62.50 @ .90
13.25
31263.25
436.75
1.39
7630.75
Aug 20 10
64.80
Expiry 8 NP Aug 60 expired
Aug 20 10
64.80
STO 5 NP OCT 60 @ .77
13.25
30013.25
371.75
1.23
8002.50
Sep 17 10
66.12
STO 5 NP JAN 62.50 @ 1.61
13.25
31263.25
791.75
2.53
8794.25
Sep 17 10
66.12
BTC 5 NP OCT 60 @ .13
13.25
(78.25)
(0.26)
8716.00
Sep 17 10
66.12
STO 5 NP JAN 60 @ 1.12
13.25
30013.25
546.75
1.82
9262.75
Sep 17 10
66.12
Expiry: 5 NP SEP 62.50 expired
Sep 17 2010: While the chart remains strong for
PepsiCo, I
prefer to keep my distance and stay at 60.00 to
62.50. Premiums are enough for me and as I stay
out a few months, premiums are decent and I can
continue to roll early should premiums decrease
as they have done for the Oct 60.00 naked put..
