Pepsico (PEP) disappointed investors on February 9 with a slightly reduced earnings outlook and the stock lost 6% of its value over the following few weeks. The actual news was the company is cutting costs (headcount, product focus) to improve margins for the long-term, but the market knocked it down for the 2012 outlook. At these levels, Pepsico yields 3.2% and has a long history of regular dividend hikes. With its global franchise and strong cash flow, Pepsico is a reasonable value here. But I don’t think buying Pepsico outright is the right play. Better is to sell a put contract on it. I like the July 21, 2012 with strike 62.5, currently selling for 1.41. If the stock closes above 62.5 on July 21, you keep the premium ($141 for each option contract). If it closes below 62.5, you get to own stock in a great franchise at a bargain basement price of 61.09, which is the adjusted cost basis (62.5-1.41). Every options contract sold represents 100 shares of stock.