Options Update: PepsiCo (PEP) & Assured Guaranty (AGO)
PepsiCo (PEP)
PEP option prices suggests greater than usual risk into EPS & Guidance.
PEP is recently trading down $1.06 to $68.19.
PEP is scheduled to report Q4 EPS on Feb. 7.
BAMO says, "The shares reflect some uncertainty over whether the macro environment (cost inflation, potential consumer weakness domestic and international) will impair management's ability to exceed its long-term growth targets in 2008."
PEP February straddle is priced at $3.10.
PEP March option implied volatility of 23 is above its 26-week average of 20, indicating larger price fluctuations.
Assured Guaranty (AGO)
AGO options priced for movement into EPS.
AGO, a Bermuda-based holding company that provides credit enhancement products, is recently down $1.28 to $23.52.
AGO is expected to release completed Q4 2007 results after the market close on February 11.
AGO February 22.5 straddle is priced at $4.10.
AGO March option implied volatility of 109 is above its 26-week average of 70, suggesting larger risk.
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About Paul Foster
Paul Foster is a former member of the Chicago Board Options Exchange with 21-years of professional experience in the capital markets, investments, trading, corporate finance, arbitrage, options and mergers & acquisitions. His writing about the options market has appeared in a wide variety of publications.
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