February’s high holy holiday is almost upon us. No, not Valentine’s Day – we’re talking about Super Bowl Sunday!
The playoff games offered one nail-biting finish after the next, and the Giants-Patriots matchup for Super Bowl XLVI in Indianapolis is sure to be the top topic at watercoolers all around the country on Monday morning.
While 100-million-plus viewers are expected to tune in to see the last game of the season, they would probably agree, however, that the real action takes place during the commercial breaks.
With 30-second ad spots going for $3.5 million, and with 70 slots available, keep a close eye on the companies that snapped up these coveted spots that will be filled appearances by such stars as Jerry Seinfeld, Jay Leno, John Stamos, supermodel Adriana Lima and the band Motley Crue, not to mention a bevy of shiny toys like autos and electronics that will capture your attention even if the celebrities don’t.
With all the talent being hired for just a few seconds of airtime, it’s safe to say the parade of marketing dollars being spent is sure to be an entertaining one … and one that’s likely to serve as an indicator of an economy on the mend or, at least, advertiser optimism that viewers are ready and eager to splurge on their products.
Your OptionsZone experts will be keeping a close eye on the big game (that’s how dedicated we are to you!), and we’ve got some predictions for the big winners of the day. No, we can’t tell you whether Eli Manning or Tom Brady will take home the trophy, but today we’re looking at five option plays that will let you play ball with the big boys, but without all the injuries!
Trade #1 — PepsiCo
Recommended by Wade Hansen and John Jagerson, SlingShot Trader
Ready to dig into some Cheetos, Doritos or Lay’s potato chips and then wash them down with a nice Pepsi or Mountain Dew while you’re watching the Super Bowl? Then you should consider munching on some long calls on PepsiCo (NYSE:PEP).
PepsiCo releases its quarterly earnings a few days after the Super Bowl – Thursday, Feb. 9, before the market opens – and we anticipate the announcement will propel the stock further along its current uptrend.
The stock is coming down from its recent highs around $67 but should find solid support at $64. This would be a great price point to enter your bullish option trade.
Revenues at PepsiCo are climbing. The company recently announced that three more of its beverage brands – Diet Mountain Dew, Brisk and Starbucks – have surpassed the $1 billion annual revenue mark, which brings the company’s billion-dollar-brand total to 22.
Analysts also anticipate the company is going to announce a new marketing and cost-cutting strategy to boost brand awareness and streamline operations. The boost in sales that should come from an increased marketing spend, coupled with higher profit margins as costs contract, should boost investor confidence in the company and warrant a higher stock price.
To take advantage of the Super Bowl snack rush and PepsiCo’s earnings announcement, we recommend you buy to open the PEP Feb 65 Calls for less than $1.35 before Super Bowl weekend.
Trade #2 — Diageo
Recommended by Jim Woods, InvestorPlace Contributor
I think one should always write about what one is most familiar with, and so I am pleased to choose as my Super Bowl option trade liquor company Diageo plc (NYSE:DEO).
Sure, we are likely to see a whole lot of beer commercials during the big game from company’s like Anheuser-Busch InBev (NYSE:BUD), but consumers are looking for something a little harder these days, and some of the most popular hard stuff is made by Diageo.
The company sports brands such as Bushmills Irish whiskey, J&B Scotch, Jose Cuervo tequila and Ketel One vodka, among many others, and is the 800-pound gorilla in the hard liquor industry. That industry is on the march and, according to the Distilled Spirits Council of the United States, the volume of spirits sold in the U.S. jumped 2.7% in 2011 from the prior year, while sales grew 4% to $19.92 billion.
I expect this trend to continue, and that means we are likely to see a move higher in DEO shares. Options players can take advantage of this move with the DEO July 95 Calls.
If you’re anything like me, you’ll be doing your part to support Diageo’s bottom line – and that’s something we can all drink to!