This week, Archna (our advanced options contributor), is chasing McDonald’s post earnings Feb 17th. MCD is a global restaurant chain in the consumer cyclical sector, with price consolidating just below all-time-highs.
Samantha LaDuc is the founder of LaDucTrading, and can be found discussing macro-to-micro market-moving news, sector rotation & trades in her live trading room & in her client slack workspace, while making her chase, swing & trend portfolios & custom trade support available for CLUB/EDGE clients.
Samantha is bullish:
Trend Timeframe:
McDonalds is not a momentum play for me. This is a boring but profitable trend-long play that gets defended when market corrects; acts as rotation into value play when growth trips up; and is not just a play on the consumer but a solid REIT proxy. MCD could split into two companies given all the real estate it owns worldwide!
Research suggests (per Yahoo Finance), that MCD owns about 45% of the land and 70% of the buildings at their 36,000+ locations which means McDonald’s is really in the business of serving as landlord for its franchisees.
On the consumer side, business is fine but not robust, as McDonald's CEO offered up post earnings last week (Feb 17th): "With expectations of moderating sales growth and ongoing inflationary headwinds, we expect our company-operated margin will remain pressured in the near-term."
That doesn't scare me away, because I can see that over time, MCDs outperforms SPY. In fact, Total Returns since inception of the S&P 500 ETF in January 1993... S&P 500 ETF: +1,910% (+10.2% annualized) McDonald's: +9,220% (+15.8% annualized)
Option Tactic for multi-month trend long play:
MCD looks ready to push above $296 soon on way to $300, but I'm more interested in the top of the trendline near $330/340. With that, there is a boring but profitable financed call spread in Jan 2025 that pays for itself: Selling the $280P + Buying the $300x325CS for near scratch allows this play time to work itself higher and take advantage of theta decay while it does. If volatility in market picks up, I would add some protection: $268 monthly support (red box). Once above $300 (green box), MCD is in blue sky territory and will likely grind higher in time to at least my price targets (yellow box) - especially if that bullish morning star candle pattern on this monthly chart follows through.
Archna is a live trading room moderator for CLUB & EDGE clients in the morning, then takes to the live stage in discord for our COMMUNITY clients actively teaching and trading advanced options.
Archna is bullish:
Chase Timeframe:
MCD long with a stop at 291.3. Looking to do a call diagonal. Selling March 15th 305C to buy March 28th 300C for a total debit of 1.75. The volatility of March 15th is 18+ and the IV for March 28th is 17.73. So, I can have a theta positive trade which is also directionally bullish.
Rithika is a live trading room moderator for CLUB & EDGE clients in the morning, while managing Samantha's Chase trades, then takes to the live stage in discord for our COMMUNITY clients contributing education and swing trade set ups using her Elliott Wave analysis.
Rithika is bullish:
Swing Timeframe:
MCD above 295 on MCD can test 300, 305. The top of the channel can go up to 325,330 on an extended push higher wave 5. Has to stay above 295 or can still be in a wave 4 sideways chop.
Tiffany manages Samantha's Swing Portfolio for CLUB & EDGE clients, does thematic research/analysis on Samantha's Trend Portfolio names, and contributes her options gamma analysis & trades for all clients.
Tiffany is bullish:
Swing Timeframe:
As long as it holds above 292.5 it can push straight to the 300 call magnet by end of this week with potential to turn into a multi-week swing into 310+. The 297.5/300 weekly call spread could work or buy next month’s 295c.
