Bulls Sweet On PepsiCo Calls As Shares Rise

| About: PepsiCo Inc. (PEP)

PEP - PepsiCo, Inc. - Options on global beverage and snack food giant, PepsiCo, Inc., are humming with activity this morning after the company posted first-quarter earnings that handily beat analyst expectations. Overall volume in PEP options is roughly three times the average daily level for the stock as of 11:00 a.m. ET. Shares in the world's largest snack maker jumped 5.8% in the early going to a record high of $83.45. Fresh interest in upside call options on Pepsi indicates some traders are positioning for shares in the name to extend gains this year. The July $85 strike calls have traded 1,600 times so far today versus open interest of 964 contracts. It looks like traders purchased most of the volume for an average premium of $1.10 each. Looking ahead to October expiration, traders stepped in to buy calls at the $85, $87.5, $90 and $95 strikes. The Oct. $90 strike is most active, with some 1,400 calls changing hands against open interest of just 11 contracts. Call buyers paid an average premium of $0.53 apiece for the $90 calls, and may profit at October expiration in the event that PepsiCo's shares surge 8.5% over today's high of $83.45 to surpass the average breakeven price of $90.53.

BYI - Bally Technologies, Inc. - The maker of slot machines and other gaming devices popped up on our 'hot by options volume' market scanner this morning due to heavier than usual trading in the May expiry puts. Front month put buyers may be bracing for shares in Bally to pull back following the company's third-quarter earnings report after the close next Thursday. The stock is down 1.0% at $47.25 this afternoon, after yesterday sinking to the lowest level in one month. May $45 strike puts traded more than 3,400 times during the first half of the trading session against open interest of 125 contracts. Time and sales data indicates most of the puts were purchased for an average premium of $0.95 each. Traders long the bearish options stand ready to profit at expiration next month should shares in Bally slide 6.8% from the current level to breach the breakeven point on the downside at $44.05. The stock last traded below $44.05 on the final trading day of 2012.

ILMN - Illumina, Inc. - Trading traffic in Illumina calls today suggests some options players are positioning for shares in the name to rally to fresh 52-week highs by June expiration. The stock is currently down 1.5% to stand at $56.79 as of 11:30 a.m. ET, amid a down day for U.S. equities. The most active contracts changing hands on Illumina as measured by volume are the June $60 strike calls. It looks like one trader purchased 1,912 of the $60 calls at a premium of $2.35 each. These contracts make money at expiration if shares in ILMN jump 10% to surpass the breakeven point at $62.35. The June $62.5 strike calls also traded this morning, within two minutes of the transaction at the $60 striking price. Roughly 325 of the $62.5 strike calls were picked up in the early going at a premium of $1.45 apiece. ILMN shares reached a 52-week high of $58.65 earlier this week. The company is scheduled to report first-quarter earnings after the closing bell on Monday.