Read This Ahead of McDonald's Earnings Report

The security has struggled after earnings in the past

Deputy Editor
Jul 20, 2022 at 11:55 AM
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The shares of McDonald's Corp (NYSE:MCD) are marginally lower this afternoon, last seen down 0.6% at $254.90, just ahead of the fast food giant's second-quarter earnings report, which is due out before the open on Tuesday, July 26. Below, we'll dive into how the stock has been performing on the charts, and explore some of its previous post-earnings activity.  

After cratering to a March 10, one-year low of $217.67, McDonald's stock staged a rally, with pullbacks in May and June saved by the $228 and $232 levels, respectively. More recently, the 20-day moving average has been guiding shares higher. Longer term, the security sports an 8.7% year-over-year lead. 

MCD Chart 20-day July 20

The security has had a lackluster history of post-earnings reactions over the past two years. Specifically, five of eight next-day sessions were lower, but MCD jumped 2.9% in April. McDonald's stock averaged a post-earnings swing of 1.6% during the last eight quarters, regardless of direction. This time, the options market is pricing in a bigger move of 3.7%.

The options pits are overwhelmingly bearish, and an unwinding of this pessimism could boost McDonald's stock. This is per the equity's 50-day put/call volume ratio of 1.32 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits in the 97th percentile of its annual range.

Short-term options traders are similarly pessimistic, per the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.61, which sits higher than 95% of readings from the past 12 months.

 

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