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Since peaking at a new all-time high of $103.78 in mid-May, McDonald's Corporation (NYSE:MCD) has drifted lower to test support in the $100 region. With MCD consolidating some gains, one options trader on Monday bought some additional time for his bullish forecast on the stock to play out.
Specifically, the speculator sold to close his weekly 7/3 102-strike calls, and replaced them by buying to open an equivalent number of weekly 7/11 102-strike calls -- a position adjustment known as a rollout. By picking up longer-dated contracts at the same strike, the trader is holding firm in his technical forecast, but purchasing some extra time value for the predicted move to occur. MCD settled Monday at $100.74, which means the shares will need to rally more than 1.3% for those 102-strike calls to achieve in-the-money status.
Yesterday's call strategist is hardly the only trader with high hopes for the fast food chain; during the past 10 days, options players on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open 2.51 calls for every put on McDonald's Corporation. This ratio ranks in the 95th annual percentile, which means traders have rarely shown a greater preference for bullish bets over bearish.