McDonald's Corporation franchises and operates
McDonald's restaurants in the food service industry. These
restaurants serve a varied, limited, value-priced menu in
more than 100 countries globally.
The restaurants are
operated either by the Company or by franchisees, including
franchisees under franchise arrangements, and
foreign-affiliated markets and developmental licensees under
license agreements.
During the year ended December 31, 2007,
the Company sold its businesses in Brazil, Argentina,
Mexico, Puerto Rico, Venezuela and 13 other countries in
Latin America and the Caribbean, which totaled 1,571
restaurants, to a developmental licensee organization.
The
Company and its franchisees purchase food, packaging,
equipment and other goods from numerous independent
suppliers.
Terms
Of Use
By using this site,
you agree to be bound by its terms of use.
The full terms of
use can be read here.
If you do not agree to the terms of use, do not access or use
this site.
Nothing presented is financial advice, trading advice or
recommendations. Everything presented is the author's ideas
only. The author accepts no liability for its use including
errors and omissions. You alone are solely responsible for your
own investing and trading. There are considerable risks involved
in implementing any investment strategies and losses can be
large. Trade at your own risk.
McDONALD'S
CORPORATION (MCD) - 2011
ONGOING EVALUATION
& TRADE
Now into
the third year, this trade has been working well. To date I
have $43500 of capital tied to McDonalds and I have
generated $10,000 in income in 17 months. Starting this year
I will increase the number of puts sold from 6 to 7
contracts. This is a great company with enormous earnings
and excellent trading ranges making my job of selling naked
puts a lot easier. Basically when the upper bollinger is
being challenged I hold off selling my puts. When the lower
bollinger is being tested, I sell my puts. Selling naked
puts on McDonald's is relatively easy as by now I have
earned a quarter of the capital I want and I can be a little
more aggressive. Nonetheless, I am still planning on keeping
2 of my naked puts further out in time and at a lower
strike. This means if I am assigned at the higher strike I
have two puts at a lower level which if assigned on the
lower puts, basically means I am overall averaging in lower
on the stock.
McDONALD'S REVIEW - Year 3
I suggest
reading the prior years to fully understand the trade.
Overall the strategy is to eventually own shares in
McDonald's but with as little of my own capital as possible.
To quickly review:
Starting By Selling Naked Puts Until I am
assigned or I can raise enough capital to put myself into the
stock in the mid 50's range.
Should I be unable to sell puts at
the closest month out, then I am willing to go further
out in time. However the main objective with the puts is
to raise enough capital to have my share valuation in
the mid 50's.I am not interested in owning the stock
long term. I am interested in income from put and call
writing.
Should the stock fall dramatically, I
will not be adverse to selling naked calls OTM.
If assigned I will sell Covered Calls until
exercised
If the stock should fall too low making
covered call selling impractical, I will add to my position to
lower my overall cost either through purchasing the stock or
selling additional naked puts or calls depending on the
circumstances.
UPDATE MARCH 2010. Read
below my update as of March 22 2010.
UPDATE AUGUST 18 2010:
Read below my update as of August 18 2010 and see the
following chart. New trend in the stock for selling
naked puts, has moved from the mid-50's range to the
mid-60's range. I will keep 4 naked puts in that range
and sell 5 near the top of the range around the $70
strike.
UPDATE JAN 2011: I plan to increase the number of put
contracts from 6 to 7. This is primarily to use some of
the capital I have earned to date. I also will continue
to sell 2 naked puts further out in time and at lower
strikes. This is to assist should the stock fall and I
get assigned at the higher strike and lower strike, I
will have averaged myself into the stock, at a lower
valuation.
In November 2010 the stock
set another new 52 week high, but McDonald's needs much
better earnings to move much higher. I believe the stock
will be in a trading range somewhere between 72.50 to
77.00 for much of the year. I will sell my puts against
the lower Bollinger Band.
Should you find my strategy and ongoing evaluation of
this trade of value I hope you will consider a tip
for the time I spend detailing out this trade.
I have set up a Paypal account for those
who would like to donate. Thank you in advance. Remember, nothing on my site is financial advice.
They are just my ideas and opinions. Investing is risky and losses can be large. Trade
at your own risk.
Read the
terms of use
YEAR 1: 2009
Trade Commenced August 2009 Goal for 2010:
5% (5 months)
Strategy: Naked Puts until assigned stock
Capital In Use At End Of 2010
60,000
Income Earned in 2010 (10 months)
4599.25
Return On Capital in 2010 (10 months)
7.6%
YEAR 2: 2010 Goal for 2010: 12%
Strategy: Sell Naked Puts Until Assigned
Capital Currently In Use
43,500.00
Income Earned in 2010
5461.00
Return On Capital in 2010
12.55%
YEAR
3: 2011 Goal for 2010: 12%
Strategy: Sell Naked Puts Until Assigned
Keep 2 contracts at lower strikes
Capital Currently In Use
54021.50
Income Earned in 2011
3892.75
TOTAL INCOME EARNED
TO DATE
13953.00
Total Of My Own Capital
Required
40,068.50
Number Of Shares if
assigned
600
Share Price Valuation
(Total Capital Required/Number of shares)
66.78
YEAR - 3:
2011
TRADE COMMENCED March 5 2010
GOAL FOR 2011:
12%
ONGOING STRATEGY
- SELLING NAKED PUTS UNTIL ASSIGNED
* ACTIVE TRADES ARE HIGHLIGHTED
IN YELLOW
JAN 12 2011:
The stock is under pressure. Earnings were good but not
as great as many had wanted. The more important aspect was
that the earnings revealed an increase in the cost of doing
business which could impact McDonald's earnings for 2011. I
believe the stock will stay stuck in a trading range. Right
now the trend is lower, but as per my notes above under the
section of review, I feel the lower range could be $72.50.
Everything points to the stock moving lower except the
oversold condition on the stock. Therefore I am buying to
close my March 67.50 puts but I will wait for this move to
bottom and then buy and close my Jan 75 naked puts and roll
them into March, as I believe the stock will recover by then
and I can capture all of the premium all the way up.
Jan 12 11
74.00
BTC 2 Naked Puts March 67.50 @ .55
0.80
9.50
(119.50)
9940.75
JAN 13 2011:
Just a day later and the stock hits my low range of $72.50.
I have put in place my strategy. I just waited for the stock
to hit $72.50 and then did my trades. I had established the
trading range I expected and I have watched my technicals.
If I am wrong and the stock sells off further, I am well
positioned to weather the downturn. I am sure the stock will
recover to $75.00.
On the sell
side I have increased my put contracts from 4 to 5 which
brings the overall naked puts being sold to 7 contracts.
Jan 13 11
72.55
BTC 4 Naked Puts Jan 75 @ 2.70
3.6%
12.00
(1092.00)
8848.75
Jan 13 11
72.55
STO 5 Naked Puts Feb 75 @ 3.60
4.9%
13.25
1786.75
10635.50
Jan 13 11
72.55
STO 2 Naked Puts Mar 67.50 @ 1.00
1.4%
9.50
190.50
10826.00
Feb 18 11
76.13
Expiry 5 Naked Puts Jan 75 expired
Feb 18 11
76.13
BTC 2 Naked Puts March $67.50 @ .35
0.5%
9.50
79.50
10746.50
Feb 18
2011: The stock has recovered and my puts expired.
It was a nice trade. However the stock is weaker at
this level and I believe it will pull back. I closed
the March 67.50 puts today and I will place all my
naked puts back into focus in a few days.
Feb 25
2011: The stock has pulled back. I have placed my 5
naked put trades but I am holding off on the 2 lower
naked puts as I believe the stock could be heading
lower. Below my charts show my outlook for the
stock. I am selling the $75.00 as I believe if the
stock falls it will recover back to the $75.00
range.
Feb 25 11
74.65
STO 5 Naked Puts Mar $75.00 @ 1.35
1.8
13.25
661.75
11408.25
Mar 2
2011: The stock took a tumble today and I sold my 2
additional puts.
Mar 2 11
$73.75
STO 2 Naked Puts JUN $67.50 @ .88
1.3%
9.50
13,509.50
166.50
11574.75
Mar 18
2011: With expiry today the stock closed at $72.99.
I closed my Mar 75 puts and rolled into April.
Looking a the chart I should have bought to close my
naked puts last week or at least on Monday, but with
the news from Japan, MCD has fallen. I believe it
will recover again once the news from Japan calms
down and the stock will turn. Note how today the
stock is once again near the lower end of what I
feel is the trading range - namely near $72.50.
Mar 18 11
73.25
BTC 5 Naked Puts Mar 75 @ 2.00
(2.6%)
13.25
(1013.25)
10561.50
Mar 18 11
73.20
STO 5 Naked Puts Apr 75 @ 2.80
3.7
13.25
1386.75
11948.25
Apr
15
2011: Looking at McDonald's the stock is back in
an uptrend. When I look at the low points of the
stock since January it is still making new higher
lows. While it has not recovered to above 80 as it
was in December, the stock is slowly grinding
higher. I see no problem selling the 75 strike
again. It may end up in the money next month but I
am fairly confident it will end up out of the money
in subsequent months.
Apr 15 11
76.80
STO 5 Naked Puts May 75 @ .82
1.05
13.25
37,513.25
396.75
12345.00
Apr 15 11
77.38
Expiry: 5 Naked Puts April 75 expired
May 20 11
82.33
May Options Expiry: 5 Naked Puts May 75 expired
May 20 11
82.33
BTC 2 Naked Puts JUN $67.50 @ .04
(0.13)
9.50
(17.50)
12,327.50
MAY 23 2011 McDonalds Stock continues to climb. I
cannot sell naked puts at this level as I believe it
is over valued. The Ultimate Oscillator has been
oversold for a few sessions. There is never any
guarantee of a pullback, but I would think one has
to come soon for McDonalds. Until then, this trade
is on hold.
Sep 23 11
86.25
Sold 6 Out Of The Money Puts NOV 82.50 @ 1.67
COMMENTS: Select this
MCD STOCK link to read the reasons for
re-entering
MCD Stock put trades on Sept 23 2011.
1.3%
14.50
49514.50
987.50
13315.00
Nov 21 11
92.28
Sold 3 Out Of The Money Puts 21JAN12 $82.50 @ 1.00
