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PEPSICO
INC
 
About The Company

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.

 

 

 

 

 
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  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. 
PEPSICO TRADES BY YEARS
VIEW PEPSICO STOCK 2011 TRADES
VIEW PEPSICO STOCK 2010 TRADES
VIEW PEPSICO STOCK 2009 TRADES
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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..

 

    END OF YEAR 2 - EARNED $5455.25                
PEPSICO TRADES BY YEARS
VIEW PEPSICO STOCK 2011 TRADES
VIEW PEPSICO STOCK 2010 TRADES
VIEW PEPSICO STOCK 2009 TRADES

 

Disclaimer: There are considerable risks involved in all investment strategies. Trade at your own risk.
Stocks, options and investing are risky and can result in considerable losses. None of the strategies, stocks or information discussed or presented are financial advice, trading advice or recommendations. Fullyinformed.com is a private website. Everything presented and discussed are the author's ideas and opinions only.
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