Goldman Sachs Suggests Buying Strangles on PEP

Goldman Sachs is out with a research note this morning, where it suggests traders buy strangles on PepsiCo, Inc. PEP to capture volatility. The Goldman analysts noted that PEP options among the cheapest in their universe and that they see the potential for greater volatility than what is being priced in. Goldman Sachs Consumer Staples analyst, Judy Hong, views PEP as her top pick for 2011, with three key drivers of outperformance: 1) Double-digit profit growth, 2) Spending improvement, and 3) Improving sentiment. The analysts suggest buying the March $65/67.50 strangle for $1.71. PepsiCo, Inc. is a global food, snack and beverage company. The Company's portfolio includes oat, rice and grain-based snacks, as well as carbonated and non-carbonated beverages, in over 200 countries.