September 2026 Options Now Available For PepsiCo (PEP)

Stock Options Channel analyzes potential options strategies for PepsiCo (PEP), highlighting a $120 put contract with a 65% probability of expiring worthless, offering an 8.33% return on cash commitment (6.30% annualized) if it does. Additionally, a $130 call contract, representing a covered call strategy, has a 46% chance of expiring worthless, potentially boosting returns by 9.79% (7.40% annualized); implied volatility for the put and call options are 27% and 24% respectively, compared to a 20% trailing twelve month volatility.

Analysis

The article from Stock Options Channel details two specific options strategies for PepsiCo (PEP), currently trading at $128.14 per share. The first strategy involves selling a cash-secured put contract with a $120.00 strike price, which has a current bid of $10.00. This strategy implies a potential acquisition cost basis of $110.00 per share, representing an attractive entry point for investors interested in PEP. This put option is approximately 6% out-of-the-money, with analytical data suggesting a 65% probability of expiring worthless. If it does expire worthless, the seller would realize an 8.33% return on the cash commitment, or a 6.30% annualized yield, termed "YieldBoost." The implied volatility for this put option is 27%. The second strategy is a covered call, where an investor holding PEP shares sells a call option with a $130.00 strike price, currently bidding at $12.55. If the stock is called away at the September 2026 expiration, this would result in a total return of 11.25% (excluding dividends) based on the current share price. This call option is approximately 1% out-of-the-money, and there is a 46% assessed probability of it expiring worthless. Should it expire worthless, the premium collected would provide a 9.79% additional return, or 7.40% annualized. The implied volatility for this call is 24%. Notably, both options' implied volatilities (27% for the put and 24% for the call) are higher than PepsiCo's actual trailing twelve-month volatility of 20%, suggesting that options markets are pricing in greater future price swings than recently experienced.

Key Decisions for Investors

• Investors considering acquiring PepsiCo shares could evaluate selling the $120 strike put, aiming for a reduced cost basis of $110.00 or an 8.33% return if the option expires worthless, given its 65% probability of such an outcome.
• Existing PepsiCo shareholders seeking to generate additional income might consider selling the $130 strike covered call, which offers a potential 9.79% premium if it expires worthless (46% probability) or an 11.25% total return if the stock is called away, although this caps upside potential above $130.
• Investors should note that the implied volatilities for both the put (27%) and call (24%) options are higher than PEP's 20% trailing twelve-month historical volatility, indicating that option sellers are currently compensated for an expectation of increased future price movement, which could be advantageous if actual volatility remains subdued.
• Carefully assess the risk-reward profile of each strategy, considering the probability of the options expiring worthless versus the commitment to buy shares (for the put seller) or the capped upside (for the covered call seller), in alignment with individual market outlook for PEP and investment objectives.