Add More PEP

PEP October 60 Calls Look Like a Value

By Bryan Bottarelli
Wednesday, June 14, 2006 9:57 AM EST
Wed, 14 Jun 2006 14:57:00 GMT

Dear Bottarelli Research Member,

On June 7th, we bought Pepsico (PEP) October 60 Calls (PEP JL) for $2.90 based on the fact that PEP is one of the best “safe haven” plays in this extremely weak market environment. PEP management has been supporting the stock via buybacks, and if you look at the chart, you can see how well the stock fared in the brutal month of May.

PEP

Over the last few days, PEP has inched lower. But today, I think the stock is beginning to establish a support point for a longer-term upstroke. As I write, the October 60 Calls (PEP JL) trade between $2.00 and $2.15. I’d like to add to our position at these levels. After you add more, lower your stop loss to $1.20.

PLAY: Buy more Pepsico October 60 Calls (PEP JL) at or under $2.15, good for the day. Lower your protective stop loss to $1.20.

Also, Goldman Sachs (GS – NYSE) is moving up a little today, and this move has priced your GS July 125 Puts (GS SE) between $0.15 and $0.20. A sale at these levels could get us the $2.00 basket value we were looking for.

Lock and load

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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