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Dan Nathan's McDonald's Trade

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CNBC Options Action's Dan Nathan suggested on the show on Friday an options strategy for traders that have a long stock position in McDonald's Corporation (NYSE: MCD).

He explained that call options made approximately two thirds of the options volume on Friday as traders are positioning for a big move that could happen after the company announces a turnaround plan on Monday.

Nathan thinks that this is a good opportunity to own the stock and collect some yield.

Nathan wants to sell the May 8 weekly 100 calls for $1.10 and he also wants to sell the May 8 weekly 95 put for $0.90. This structure offers a protection of $2 on the downside and if it trades higher, the profits are capped at $102. Below $95, he would have to add to his position.

Mike Khouw commented that this strategy makes a lot of sense and Carter Worth believes that the stock is going higher.

 

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Posted-In: Carter Worth CNBC Dan Nathan Mike Khouw Options ActionMedia