By Pete Najarian of OptionMonster
NEW YORK -- Bulls were piling into PepsiCo (PEP) on Monday for the second session in a row.
On Friday, our scanners detected upside action in the January 87.50 calls, and now traders are shortening their time horizon. OptionMonster's tracking systems found heavy buying in the December 90 calls, where more than 13,300 traded for 11 cents to 29 cents Monday in volume that dwarfed the previous open interest of just 15 contracts.
These calls lock in the price where traders can purchase the stock through mid-December no matter how far it might climb with the potential to provide significant upside leverage. They could be sold earlier at a profit if premiums rise with a rally before then, but the contracts will expire worthless if shares remain below $90.
PepsiCo shares gained 1.51% Monday to close at $84.61. The snack and beverage giant bounced off support at its 200-day moving average around $79 early this month and accelerated higher after reporting third-quarter results about a week later.
Total option volume in PepsiCo was just shy of 49,000 contracts, seven times its daily average for the last month. Overall calls outnumbered puts by more than 15 to 1, reflecting the session's bullish bias.
Najarian has no positions in PEP.