PEP's Call-Dominated Options and $150 Breakout Potential: A Bullish Setup Amid Restructuring Risks

• PEP’s options market is skewed bullish, with 13,907 open interest at the $160 call strike (Friday expiry) and a put/call ratio of 0.63. • A $10.2M block trade sold 30,000 puts at the $140 strike (expiring Oct 17, 2025), hinting at hedging or short-term bearish positioning. • Recent news of plant closures clashes with product innovation wins like dye-free Doritos, creating a mixed narrative for investors. • Technicals show PEP trading above all major moving averages, with RSI at 44.16 and Bollinger Bands suggesting consolidation before a breakout.

Here’s the core insight: PEP’s options market is pricing in a strong upside bias, but near-term operational risks could create volatility. The stock shows upside potential if it breaks above $150, but downside risks linger below $145.

The Call-Put Imbalance and Whale Moves: A Tale of Two Bets

Let’s start with the options data—it’s telling a story. The top OTM call strike at $160 has 13,907 open contracts (Friday expiry), nearly triple the next highest at $155. That’s not just noise; it’s a vote of confidence from traders expecting a sharp rally. Meanwhile, puts are clustered at $145 and $135, with the $140 strike catching attention due to that massive $10.2M block trade.

What does this mean? The call-heavy setup suggests market participants are pricing in a potential breakout above $150, possibly driven by positive earnings or product momentum. But the block trade selling $140 puts (PEP20251017P140) is a red flag. Someone is hedging against a near-term drop, maybe anticipating costs from plant closures or tariff pressures.

The put/call ratio of 0.63 (calls dominate) reinforces the bullish bias, but don’t ignore the puts. If PEP stumbles below $145, those put buyers could step in to stabilize the price. The danger? A breakdown below $142.70 (30D support) could trigger a cascade of stop-loss orders.

News That Could Tip the Scales: Innovation vs. Operational Pain

Now, let’s unpack the news. PepsiCo’s plant closures and layoffs are a short-term reputational hit, but the “Naked” Doritos and Cheetos rollout is a smart move. Health-conscious consumers are a growing demographic, and ditching artificial dyes could boost sales. Analysts from Zacks are even upgrading PEP, calling it a 2026 growth play.

But here’s the catch: Tariff headwinds and restructuring costs are real. The company’s margins are under pressure, and if earnings miss expectations, that $140 put block trade might not be enough to cushion the fall. The key is whether product innovation can offset operational pain. Right now, the market seems to believe it can—hence the call buying—but don’t bet the farm.

Actionable Trade Ideas: Calls, Puts, and Price Levels to Watch

For options traders, the $150 call strike (Friday expiry) is the most compelling. With 5,335 open contracts and PEP trading at $149.01, this is a near-the-money play. If the stock breaks above $150, these calls could see exponential gains. For a longer-term bet, the $157.5 call (next Friday expiry) has 376 open contracts and could benefit from a sustained rally.

On the bearish side, the $145 put (Friday expiry) has 3,941 open contracts. If PEP dips below $145, these puts could gain value. But given the bullish technicals, I’d lean toward a call debit spread: Buy the $150 call and sell the $160 call to reduce cost.

For stock traders, consider entry near $147.50 if support holds. A breakout above $150 targets the upper Bollinger Band at $154.57. A stop-loss below $145 would protect against the plant closure risks. If you’re bearish, a short-term short near $149.50 with a tight stop above $150 makes sense, but this is a riskier play given the call-heavy sentiment.

Volatility on the Horizon: Balancing Bullish Momentum and Structural Risks

The next few weeks will be critical. If PepsiCo’s product innovation drives sales growth and tariffs ease, the $160 call strike could become a reality. But if restructuring costs bite harder than expected, the $140 put block trade might signal a deeper correction.

The path forward isn’t all smooth. But for now, the options market and technicals are leaning bullish. Keep an eye on the $150 level—it’s not just a price, it’s a psychological barrier. Clear it, and PEP could reclaim its status as a dividend king. Miss it, and the puts will have the last laugh.