McDonald’s Corp. (MCD)
Upate 2/24/2017: MCD rose almost continually after earnings were published. I exited for a loss to avoid potential assignment on ex-dividend day.
Shares rose by 4.7% over 35 days, or a 49% annual rate. The options positon produced a 24.32% loss on debit for a =254% annual rate.
MCD publishes earnings on Monday before the opening bell
I shall use the MAR series of options, which trades for the last time 56 days hence, on March 17.
Implied volatility stands at 19%, which is 1.6 times the VIX, a measure of the volatility of the S&P 500 index.
MCD’s IV stands in the 33rd percentile of its annual range and the 69th percentile of its most recent broad movement.
The price used for analysis was $122.25.
The premium is 56% of the width of the position’s wings.
The risk/reward ratio is 0.8:1.
Decision for My Account
I have entered a position on MCD as described above. The stock at the time of entry was priced at $122.20.
By Tim Bovee, Portland, Oregon, Jan. 20, 2017