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Carter Worth And Mike Khouw's Bearish McDonald's Trade

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Carter Worth analyzed on CNBC's "Options Action" the recent break out in McDonald's Corporation (NYSE: MCD).

He identified the inverse head and shoulders pattern on the three-year chart and he concluded that the measured move higher for the stock is $150. He calculated that difference between the bottom and the neckline is $20 and he added that amount to the neckline to reach $150. Worth thinks that it would be a good idea to take profits or sell short McDonald's.

Mike Khouw thinks that the best way to make a bearish bet is by selling the July 150/155 call spread for a credit of $1.45. If the stock stays below $150 at the July expiration, Khouw is going to collect the total premium. The trade is going to start to lose money above $151.45 and it can maximally lose $3.55.

 

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