Pepsi Stock Falls Flat After Quarterly Report

PEP call traders are coming out in droves

Deputy Editor
Oct 1, 2020 at 10:56 AM
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The shares of PepsiCo, Inc (NASDAQ:PEP) are down 0.4% at $138.01, after the food and beverage behemoth entered the earnings confessional this morning, reporting third-quarter earnings that beat Wall Street's estimates. Additionally, revenue came in just above forecasts, boosted in part thanks to a rise in snack purchases by consumers still in lockdown.  

On the charts, PEP is still enjoying gains from its Sept. 28 bull gap, which sent the stock back above the $134 level -- a level that falls in-line with the stock’s year-to-date breakeven mark Meanwhile, PEP boasts a 12.8% lead over the last six months, while the stock’s 80-day moving average has once more solidified itself as a layer of support. That trendline is also in a prime position to capture any pullbacks the equity may see after this post-earnings blunder.

Today's options pits are flashing some serious bullish activity. In fact, in just the first hour of trading, over 10,000 calls have exchanged hands -- seven times the intraday average and volume pacing in the top percentile of the stock's annual range. Most popular is the weekly Ocotober 142-strike call, followed by the October 140 call. 

And with earnings in the rearview mirror, options seems like a decent way to go at the moment. PEP’s Schaeffer's Volatility Index (SVI) of 24% stands in the 13th percentile of its annual range, implying that options players are pricing in relatively low volatility expectations at the moment. What's more, the equity's Schaeffer's Volatility Scorecard (SVS) ranks at 16 out of a possible 100, implying that the stock has tended to disappoint on volatility expectations in the past year.


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