Fast food giant McDonald’s (MCD) was looking slightly more the Happy Meal for bulls on Monday as shares gained 0.93% compared to a flat performance for both the Dow and SP-500. However, lighter and below-average appetites as evidenced by its weak volume characteristics, do little to suggest a more meaningful move. And with the broader averages testing their April highs as the market gets ever closer to the perennially nasty months of September and October and a trio of existing bearish patterns in place; is the real happy meal is being served up for bears?
Figure 1: McDonald’s (MCD) Daily Bearish View
When it comes to the market there are few guarantees, but stacking up a bearish combo meal of an Elliott Wave 4 EBOT signal with a flag or continuation head and shoulder pattern, does look to be an appetizing situation in MCD in conjunction with money management. Additionally, with excellent liquidity featuring penny spreads and 2.5 point strikes, there are plenty of limited-risk order options such as outrights, verticals, calendars, diagonals butterflies and condors. But with implieds trading at multi-month lows and quite fair in relation to underlying stock volatility, ordering from the long put menu or bearishly-placed put calendar are a couple position types we see as being on today’s value menu with their aligned short deltas and long vega, making extra sense and maybe cents too.
Senior Options Writer, former Market Maker & fulltime Option Hedge Hog Advocate
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