Breaking down McDonald's stock's post-earnings history, and a trendline that's served as support in the past
McDonald's Corp (NYSE:MCD) is gearing up for its second-quarter earnings report, due out before the open on Wednesday, July 28. Shares of MCD are pulling back ahead of the event, off 3.4% at $226.73 at last check, as the broader market takes a dive. McDonald's stock is coming off a July 14 record high of $239.05, too, though there's reason to believe this recent pullback could be short lived.
McDonald's stock just pulled back to its 80-day moving average after months above the trendline. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, similar moves have occurred four other times over the past three years, and enjoyed positive one-month returns 67% of the time, averaging a 0.2% pop. Slightly below this trendline is the 120-day moving average, which kept a lid on shares until MCD broke higher in mid-March.
Puts are popular with McDonald's stock today, with 16,000 across the tape so far -- triple the intraday average amount -- compared to 13,000 calls. The most popular is the 7/23 225-strike put, followed by the 227.50-strike put in the same weekly series, with positions being opened at both.
Drilling down to MCD's post-earnings moves over the past two years, results have been a mixed bag, with the equity dropping lower after five of these eight reports, though several of these next-day drops have been muted. Regardless of direction, McDonald's stock has averaged a 1.6% move the day after earnings, which is smaller than the 3.8% swing the options pits are pricing in this time around.