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McDONALD'S
CORP
 
About The Company

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.

 
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  McDONALD'S CORPORATION  (MCD) - 2010
ONGOING EVALUATION & TRADE
This is one of those stocks where stock investor sites like fool.com praise it and tell everyone how if they had only bought it 20 years ago they would be up maybe 388%. Well if I had known 20 years ago that this stock would give me a 388% return over 20 years I would have bought it. What is the point of telling investors today that this stock should have been bought 20 years ago? So instead let's look at the stock today and decide what the goal should be. My goal is to make an income from naked put writing until I am assigned. Then I want to sell both calls and puts. To begin let's look at the chart on this stock for the past few months. The stock is trading roughly between $55 and $60. When I look at the 10-20-30 moving averages, the stock has a great trend, basically not really going anywhere. This is great for naked puts and covered calls.
McDONALD'S TRADES BY YEARS
VIEW McDonald's-2011 TRADES
VIEW McDonald's-2010 TRADES
VIEW McDonald's-2009 TRADES


McDONALD'S REVIEW - Year 2

  • 2009 STRATEGY 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 FOR JAN 2010. With additional cash now available for selling puts in 2009 I will become more aggressive.

  • 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 latest 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.

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CURRENT U.S.
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AT+T
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INTEL CORPORATION
JOHNSON & JOHNSON
KRAFT FOODS
MCDONALDS
MERCK & COMPANY
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NUCOR CORPORATION
PEPSICO
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VISA
EXXON MOBIL
YUM! BRANDS

 
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 Jul 10 2009
Goal for 2010: 6% (6 months)
Strategy: Naked Puts until assigned stock
 
2009 - starting capital 22,000.00
2009 - ending capital 53,200.00
2009 - capital earned 4636.00
2009 - return on all trades 18.23%
   
YEAR 2: 2010
Goal for 2010: 12%
Strategy: Sell Naked Puts Until Assigned
 
2010 - starting capital 53,200.00
2010 - ending capital 43,500.00
2010 - capital earned 5461.00
2010 - return on all trades 12.55%
   

 

 

 

YEAR - 2:  2010

 

JAN 15 2010: With the cash built from the last year's trading, I am now ready to sell puts closer to the strike. You can see from the chart above that MCD has had a great run. But resistance is presently around $64.00 and support is around $61.00. If I am put the shares at $60.00 I will be in this stock at about 54.00. It is therefore time to be more aggressive and sell closer to the ATM price. Meanwhile I will continue to sell puts further out in strike to augment the income and add some protection in case of a pullback below $60.00. I will reduce the number of contracts and the amount in this stock by the time the March contracts expire or I close them.

 

 

Jan 15 10 62.28 Expiry: 10 NPs Jan 60 Expired                
Jan 15 10 62.28 STO 3 Naked Puts Feb 60 @ .65 1%     10.75     184.25 4783.50
Jan 21 10 63.31 BTC 3 NP Feb 60 @ .33 (0.5)     10.75     (109.75) 4673.75
Jan 21 10 63.31 STO 3 NP Mar 60 @ .78 1.3     10.75     223.25 4897.00
Mar 18 10 66.40 STO 5 NP Apr 67.50 @ 1.55 2.2     13.25     761.75 5658.75
Mar 19 10 66.53 Expiry 10 NP Mar 57.50 expired/ 3 NP Mar 60 Expired                
MAR 22 2010: REVIEW UPDATE:

The stock has had a great move since Jan 15 2010, 7.6%. If I go back and look at the 3 year chart at the top of the page I can see that this stock was in a trading range between 50 and 60 dollars for some time. It has been a very strong performer and with the recent dividend increase and earnings, the stock is probably poised to trade perhaps between 65 and 70. I will continue with a reverse naked put strategy and sell the most recent month, at the money and then split 6 contracts between two more strikes down, further out in time. I do not intend to hold these positions to expiry, only until the premiums decrease for a buy to close. Then I will roll these puts out further and continue the strategy unless fundamentals or technicals dictate that a change in strategy is required. As well, once I have earned enough income to purchase 100 shares I will sell additional AT THE MONEY puts, which may increase my odds of earning more income.

 

The stock is presently pushing up against an overbought signal but overall I am not concerned as I think on the low side it could fall back to perhaps 62.50. Presently there appears to be strong support at that level. The stock is up 17.5% since August 2009 when I commenced my naked puts. During that time period I have generated, 6147.00. In order to have made this income through buying the stock, I would have had to purchase approximately 600 shares at 56.45, tying up 33,870.00. In order to generate the same income of $6147.00, while I did not own any shares, I had to commit almost three times that amount of capital to cash secured puts. Again, this shows that in a rising market, buying at the bottom, holding and then selling near the top will almost always beat out selling covered calls and naked puts. However while I did set aside over 100,000 to cover any possible assignment, I was unconcerned as I was selling far enough out of the money puts that the chance of assignment would have required a severe downturn in the stock. Therefore I used margin to cover these puts and continued to invest my capital in other naked put positions which generated additional income. Still though I was unable to mimic the returns of the buy, hold and sell approach for this stock through selling naked puts. I will see how much better I do this year with my change in strategy.

 

 

Mar 22 10 66.33 STO 3 NP May 65.00 @ 1.00 1.5     10.75     289.25 5948.00
Mar 22 10 66.33 STO 3 NP Jun 62.50 @ .90 1.4     10.75     259.25 6207.25
Apr 16 10 68.84 STO 5 NP May 67.50 @ .93
Comment: Reverse ladder is still in play. I am short naked puts on the 65 and 67.50 strikes.
1.3     13.25     451.75 6659.00
Apr 16 10 69.03 Expiry: 5 NP Apr 67.50 expired                
APR 23 2010: Like so many stocks I am following, MCD has set a new 52 week high. The stock remains in a strong uptrend and recent earnings were very good. However as I am selling naked puts, while the stock is up $14.57 or over 14%, since I started in August 2009, my return is around 10.6%. These are all signs that tell me that the market is in a bull trend and no bear cycle will appear for sometime yet. Two days ago more than 90 stocks set new 52 week highs, a sure sign of a bull market. Should this stock pull back I will continue to roll puts at the money. The reverse naked put ladder is far more efficient bear cycles. Covered calls cannot duplicate stocks that are in a strong bull market. At the beginning of March the stock was at 63.50 and we are up more than 10% since then. My next move after May expirations, will be to end the reverse put ladder and reduce the number of contracts being sold as well as the amount of capital being held for this position. I will then be selling at the money puts until the stock pulls back, which may still be sometime to come. By reducing the capital and using it elsewhere, should the market pullback I can take advantage of lower prices and consider more puts or even stock purchase. To this effect today I BTC a number of positions and opened 3 NP for May 70 and 3 JUN 67.50 puts.

 

Apr 23 10 71.04 BTC 3 NP MAY 65 @ .09 (0.13)     10.75     (28.75) 6630.25
Apr 23 10 71.04 STO 3 NP MAY 70 @ .70 1     10.75     199.25 6829.50
Apr 23 10 71.04 BTC 3 NP JUN 62.50 @ .17 (0.27)     10.75     (61.75) 6767.75
Apr 23 10 71.04 STO 3 NP JUN 67.50 @ .70
See my comments for April 23, regarding the end of reverse put ladder for the present time on this stock.
1.03     10.75     199.25 6967.00
May 11 10 70.58 BTC 5 NP MAY 67.50 @ .24 (0.36)     13.25     (133.25) 6833.75
May 21 10 67.86 Expiry: BTC 3 NP MAY 70 @ 2.15
Comments: This is a great company but looking at the premium for Jun, there is no reason to accept assignment in May. I believe it is better to capture more option premium and roll to Jun at the same strike.
(3.0)     10.75     (655.75) 6178.00
May 21 10 67.86 STO 3 NP JUN 70 @ 3.51 5.0     10.75     1042.25 7220.25
Jun 1 10 66.28 STO 10 NP JUN 60 @ .21 0.35     19.50     190.50 7410.75
Jun 1 10 66.80 STO 5 NP SEP 60 @ 1.49 2.5     13.25     731.75 8142.50
JUNE 18 2010: What a great recovery in MCD's price. Now back at 70, my naked puts for Jun could be closed for a .23 cents, locking in a large profit from the May 21 sell of Jun 70 at 3.51. This also allows me to commence selling naked puts back below the current price and restart my naked put strategy.

 

Jun 18 10 69.88 Expiry: 3 NP JUN 67.50 expired / 10 NP JUN 60 expired                
Jun 18 10 69.88 Expiry: BTC 3 NP JUN 70 @ .23       10.75     (79.75) 8062.75
Jun 18 10 69.88 STO 4 Naked Puts JUL 67.50 @ .55       12.00     208.00 8270.75
JUNE 29 2010: Up and then down again. Well it WAS a nice recovery and now MCD is moving down again. This time there may be more selling as MCD moves possibly lower. It can easily get down to 64 without concerning me. I did my usual strategy today. I bought to close 4 JULY 67.50 puts and sold 2 JAN 65 puts for a nice net credit and that left 13000 of capital free for more puts so I sold the August 60 puts for .65. This reduces my overall capital exposed to MCD by 23000.00 and increases my income by 337.00. While still holding above the 150 and 200 day, it shows the strength of this well run company. If selling intensifies though, I believe it will fall back to the low 60's. Anything below 60.00 is a good bargain on McDonalds and I look forward to selling naked puts should it fall below 60.00.

Jun 29 10 66.55 BTC 4 Naked Puts Jul 67.50 @ 1.68
COMMENTS: SEE MY COMMENTS BELOW UNDER JUNE 29 2010
(2.4)     12.00     (684.00) 7586.75
Jun 29 10 66.25 STO 2 Naked Puts Jan 65 @ 4.55 6.9     9.50     900.50 8487.25
Jun 29 10 66.25 STO 2 Naked Puts Aug 60 @ .65 1.0     9.50     120.50 8607.75
Aug 17 10 71.90 STO 5 Naked Puts SEP 70 @ .63 0.90     13.25     301.75 8909.50
Aug 17 10 73.40 BTC 5 NP SEP 60 @ .10 (0.16)     13.25     (63.25) 8846.25
AUG 18 2010: UPDATE REVIEW:

Another new 52 week high today. MCD has been setting new 52 week highs since the beginning of the month. I have closed my Sept 60 puts and moved to Sept 70. I am thinking that once the excitement of MCD's earnings dissipates, I could be sitting close to or just about in the money. I would think the stock would drift back into the 65 to 70 range. This would allow me to sell puts at this range for sometime, and reap higher premiums until the stock moves higher which might not be until into the fall. Meanwhile I have rolled two additional naked put to Dec 65 for 1.20. These are the naked puts from August 60 which I expect will expire in two more trading sessions when August puts expire this Friday. This is a great success story. Imagine a stock holder who bought shares back in August 2009 when I first started my naked put strategy. They would have paid $56.45 and today they would be up over $16.00 or 30% in one year, with the dividends! This is why investors love to stay with strong equities. 

Aug 18 10 72.90 STO 2 NP DEC 65 @ 1.20             230.50 9076.75
Aug 20 10 73.08 2 Naked Puts Aug 60 expired                
SEP 17 2010: McDonald's has set a lot of new highs and you can tell from the chart that the uptrend has been strong. However momentum is decreasing and MACD is turning down BUT is above 0.00 indicating that the uptrend is still intact. Once it falls below 0.00 it will mean the uptrend is broken. McDonald's is a great company and the previous low was 65 and the previous top was 70.00. I will sell a couple of naked puts at 67.50 and then see where trend takes the stock. If the trend continues that will leave me with additional naked puts I can write. I am holding puts already for December and January. There is no premium worthwhile for October so I will sell these 2 nakd puts for March at 67.50

Sep 17 10 74.32 Expiry 5 Naked Puts Sep 70 expired                
Sep 17 10 74.32 STO 2 Naked Puts Mar 67.50 @ 2.19 3.2     9.50     428.50 9505.25
NOV 5 2010: McDonald's continues to climb. I am still sitting below $70.00 With my earnings of over $9800.00, I am comfortable moving higher. I have sold the Jan 75.00 naked put and I will continue to keep rolling until I am eventually assigned. The stock is in a major uptrend, but at these levels, MCD is getting somewhat "lofty" in my opinion and any stock pullback should be a great opportunity to sell more naked puts at better premiums.
Nov 5 10 79.04 BTC 2 Naked Puts Jan 65 @ .34 0.54     9.50     (77.50) 9427.75
Nov 5 10 79.04 STO 4 Naked Puts Jan 75.00 @ 1.15 1.5     12.00     460.00 9887.75
Nov 10 10 79.50 BTC 2 Naked Puts Dec 65 @ .13 0.20     9.50     (35.50) 9852.25
DEC 6 2010: McDonald's has stayed in a short trading range since the beginning of November. Today I closed the Jan 75 puts early and I wait a few days as the stock is trading near the high end of its range. I would prefer to sell the next set of naked puts when the stock pulls back.

Dec 6 10 79.50 BTC 4 Naked Puts Jan 75 @ .22       12.00     (92.00) 9752.25
DEC 16 2010: This is why I never buy when the stock hits a new 52 week high. Looking at this trend each time the stock has made a new 52 week high, it sells off and then the "dip buyers" step in - those investors who buy stocks on the dip, and they push it again and another new high is set. Then another sell of. But this time the stock sold off and fell right to the lower Bollinger but unlike the previous sell offs, this time the stock has not recovered and the Lower Bollinger is widening away which often indicates that the stock has more room to fall. But today the put premiums are good and I have made enough capital that I don't mind being assigned. I will sell the Jan 75 again. This is double dipping as I make another put sell in the same month - January.

Dec 16 10 76.70 STO 4 Naked Puts Jan 75 @ .80 1.0%     12.00     308.00 10060.25
    END OF 2010 - $10060.25   12.55%                
                     
McDONALD'S TRADES BY YEARS
VIEW McDonald's-2011 TRADES
VIEW McDonald's-2010 TRADES
VIEW McDonald's-2009 TRADES

 

 

Disclaimer: There are considerable risks involved in all investment strategies. Trade at your own risk.
Stocks, options and investing are risky and can result in considerable losses. None of the strategies, stocks or information discussed or presented are financial advice, trading advice or recommendations. Fullyinformed.com is a private website. Everything presented and discussed are the author's ideas and opinions only.
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 use this site. The author of fullyinformed.com assumes no liability for topics and ideas discussed, errors and omissions, ads and their content and external links. Any corporate insignia used are registered trademarks of their respective company or corporation and are being used for identification purposes only. All material copyrighted by FullyInformed.com. Reproduction in whole or in part prohibited. Copyright 2008

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