McDonalds (MCD) 11/6/09 PriceWatch Alert Bullish Price Movement

Posted: Friday, November 06, 2009 8:36 AM EDT

McDonalds (NYSE: MCD) closed yesterday at $61.48. So far the stock has hit a 52-week low of $50.44 and 52-week high of $64.46. McDonalds stock has been showing support around 59.88 and resistance in the 62.30 range. Technical indicators for the stock are Bullish and S&P gives MCD a very positive 5 STAR (out of 5) strong buy rating. MCD appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Mar '10 65 covered call (MCD CM) for a net debit in the $60.19 area. That is also the break even stock price for this trade. This covered call has a 134 day duration, provides 2.10% downside protection and a 7.99% assigned return rate for a 21.77% annualized return rate (comparison purposes only). A lower cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the MCD Jan '11 50 Call (VMD AJ) and selling the Mar '10 65 call (MCD CM) for a $10.91 debit. The trade has a 134 day life and would provide 0.93% downside protection and a 37.49% assigned return rate for a 102.00% annualized return rate (for comparison purposes only). McDonalds has a current annual dividend yield of 3.38%. [FBB-Seven Summits Research]

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