Consumer Staples
PEP
PepsiCo Inc.
Steady income from PepsiCo (PEP) using covered calls and cash secured puts. Dividend aristocrat with diverse food and beverage portfolio.
Monthly Premium0.8-1.4%
Annualized Return10-17%
Stock Price$155-170
IV RankVery Low (15-28)
Options LiquidityGood
Dividend Yield3.0%
Why PEP for Covered Calls & Cash Secured Puts?
PEP is more diversified than KO with Frito-Lay snacks. Dividend aristocrat status and stable business make it ideal for conservative income. Slightly better premium than KO.
Example Covered Call Trade
PEPCovered Call
Strike Price$170 (4% OTM)
Expiration30 days
Premium$1.80 per share
Return If Flat1.1% ($180)
Return If Called5.1% ($840) + dividend
Keep Probability75% keep shares
Recommended Strategy for PEP
Conservative calls 4-5% OTM. PEP works well for defensive income with slightly better returns than other consumer staples.
Risks to Consider
- Low premium potential
- Health trend concerns
- Commodity input costs
- Currency exposure
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