Soda Giant Slips Despite Upbeat Q4 Report

Still, calls are running at double what's typically seen at this point

Deputy Editor
Feb 11, 2021 at 10:53 AM
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The shares of PepsiCo, Inc. (NASDAQ:PEP) are down 1.2% to trade at $136.04, despite the soda giant reporting fourth-quarter earnings of $1.47 per share -- slightly higher than the $1.46 per share anticipated by analysts -- as well as a revenue beat. Furthermore, the company said it expects its 2021 results to meet long-term financial targets.

PepsiCo stock has been moving lower on the charts, down 8% since the start of the year, with overhead pressure at the 30-day moving average. However, the stock seems to have found support at the $136 region, which has caught the lowest pullbacks since November. 

Of the 14 analysts in coverage, eight carry a "strong buy" rating on PEP, with the remaining six a "hold" or worse. Meanwhile, short interest has begun to rise, up 7.2% during the most recent reporting period. 

Options bulls are chiming in after today's earnings events, with calls running at double what's typically seen at this point. Of the 5,698 calls across the tape so far, the weekly 2/12 140-strike call is the most popular, with plenty of traders betting on more upside by the contract's expiration tomorrow. Furthermore, new positions are being opened at the 137-strike call in the same series.

Now may be a good time to weigh in on PEP's next move with options. Coming into today, the stock's Schaeffer's Volatility Index (SVI) of 25% stood higher than just 13% of all other readings in its annual range, implying that options players are pricing in relatively low volatility expectations at the moment. Plus, with options affordably priced before the event, they could get even cheaper thanks to a post-earnings volatility crush.


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