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Carter Worth And Mike Khouw's McDonald's Trade

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On CNBC's Options Action, Carter Worth analyzed the performance of McDonald's Corporation (NYSE: MCD) relative to its peers and he concluded that it has outperformed them year-to-date. He explained that the stock gained 25 percent, while most of its peers had a return of around 15 percent return. It has also done better than the Dow Jones index, which lost 3 percent year-to-date.

Worth showed on a daily chart that McDonald's underperformed in the period from 2011 to 2014 and in 2015 it has broken out on the upside. The stock is now trading at its trend line and Worth believes that it is going to break the trend line and drop below $110, filling the gap from October.

Mike Khouw thinks that the best way to make a bearish bet is by selling the February 120/125 call spread for $1.50. The breakeven for the trade is at $121.50 and maximal loss is $3.50. Khouw explained that the 120 strike is above the average analyst price target of $118.

 

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Posted-In: Carter Worth CNBC Mike Khouw Options ActionOptions Markets Media

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