The case for shorting Coca Cola $KO with puts

I bought 5 puts on KO @ 60 expiring Jan 20, 2024 for $500 per put.

Everyone and their mother has feared a recession and bought consumer staples, energy, or utility stocks. Now some of those stocks are grossly overvalued. Some of the tech bubble from 2021 rotated to consumer staples in 2022.

KO is an awesome company with a crazy moat. But its valuation is horrible. Its forward PE is 25.7, forward P/FCF 23.3, and forward EV/EBIT is 26. If Coke misses earnings then those multiples will be even higher. Coke is supposedly a mature dividend stock, but it's trading like a growth stock.

In reality, Coke's revenue has deceased over the past 10 years. Coke pays a dividend of 2.8%, compared to a ten year treasury yield of 2.9%. Why these crazy high multiples? Because recession fears have pushed equity holders into staples, energy, or utilities. So there's a market inefficiency to exploit because too many people are crowded into too few areas. And nobody is shorting staples stocks right now, so puts are very cheap.

Options are dangerous because you can lose your entire investment. Nibble at first and don't overextend yourself relative to your portfolio. But I think Coke will fall in half from these levels and long-dated puts here can be very profitable given their current cost.

I might be early but I'm not wrong. In 10 years Coke will not trade at today's multiples.