McDonalds Stock Trade Alert – Put Selling Strategy Explained

McDonalds Stock took it on the chin today and joined in the sell-off on the stock markets. (McDonalds Stock symbol is MCD Stock) At one point McDonalds stock was down almost 4.5% helping to drag down the DOW index. McDonalds Stock has been in my portfolio for years but just like its competitors, earnings are being hampered by a global slowdown and by currency exchange which hurts profits. Third quarter earnings were $1.43 a share missing average estimates of $1.47. It is also below last year’s same quarter when earnings were $1.45 a share. Overall earnings grew 4% year over year but Revenues dipped slightly to 7.15 billion which was slightly ahead of estimates of 7.14 billion. The figures that worry investors are that operating income contracted 4% and while there was an additional 1.2% growth in the US and 1.8% in Europe, McDonalds indicated that growth in Asia is slowing.

McDonalds stock is a bellwether type stock. When McDonalds continues to grow and the stock rises, the economy is general is “hanging in” for want of a better phrase. but if a company like McDonalds is seeing a decline then obviously there is lack of growth worldwide since McDonalds is in practically every country.

McDonalds Stock Put Selling Strategy

I like McDonalds but I have felt for some time that the company is over valued. I would love to own some shares but not at these prices. To that end I started a Put Selling strategy that is fairly simple to implement and should assist in my eventually owning shares at much better prices and partially paid for by other people’s money as I sell puts to them. The strategy starts off slow and then either builds momentum as the stock pulls back, or it ends with simply closing my puts for a profit and realizing that McDonalds Stock is just not going to fall far enough for me to be interested in owning shares.

McDonalds Stock Overvalued

McDonalds Stock has been overvalued for most of this year and part of 2010.

McDonalds Stock Put Selling Strategy Outlined

McDonalds Stock has been in my portfolio for quite a few years. It has been an excellent performer. Looking at the chart with today’s news on earnings, McDonalds Stock could be poised for a bounce back. I plan to put in place a longer-term Put Selling strategy which I will start today with the decent sell-off in McDonalds Stock. For investors who are holding stock and are concerned I will discuss what I think is a reasonable strategy to continue to augment the generous dividend.

Meanwhile with the amount of selling in today’s stock market retreat, it is difficult to pick a point for a bounce in McDonalds Stock , but after such intense selling there should be a bounce next week. While my strategy does not include owning stock for a short-term bounce in McDonalds Stock  I will be adjusting the strategy positions when the bounce occurs. To take advantage of such a bounce an investor could …… This is a Fullyinformed Members Article. It is 5 pages in length with 1333 words. Members can login to read it. Non-members can join here.