Buzz Stocks: Alibaba, Amazon, and McDonald's

Today's stocks to watch in the news include Alibaba Group Holding Ltd (BABA), Amazon.com, Inc. (AMZN), and McDonald's Corporation (MCD)

Jan 29, 2015 at 9:12 AM
facebook twitter linkedin


Futures are signaling a higher start, as traders digest the latest raft of earnings reports. Meanwhile, among specific stocks in focus are e-commerce concerns Alibaba Group Holding Ltd (NYSE:BABA) and Amazon.com, Inc. (NASDAQ:AMZN), as well as fast food giant McDonald's Corporation (NYSE:MCD).

  • BABA is bracing for an 8% drop out of the gate, after the company reported lower-than-expected revenue for the fiscal third quarter. It's already been a rough week for Alibaba Group Holding Ltd, with the stock off 4.5% since last Friday's close to trade at $98.45, following a handful of fundamental developments. A continued slide could spark a round of downgrades and/or price-target cuts. Currently, all 22 analysts covering the shares maintain a "buy" or better rating, while the average 12-month price target of $120.31 stands in territory yet to be charted by the Wall Street freshman.

  • Ahead of tonight's quarterly earnings report, AMZN's cloud computing business unit unveiled a new corporate email and scheduling service, WorkMail, which will be launched in the second quarter. On the charts, the stock has been a long-term laggard, and is down 20.9% year-over-year to trade at $303.91. As such, short-term speculators have shown a preference for puts over calls, as evidenced by the equity's Schaeffer's put/call open interest ratio (SOIR) of 1.55, which ranks in the 97th annual percentile. With earnings on the horizon, those purchasing premium on AMZN's front-month options are willing to pay a pretty penny. In fact, the security's Schaeffer's Volatility Index (SVI) of 51% rests higher than all other readings taken in the past year, meaning premium is relatively expensive at the moment.

  • MCD announced today that CEO Don Thompson will step down, and be replaced by the firm's current chief brand officer, Steve Easterbrook, effective March 1. The news follows a dismal showing by MCD both on and off the charts, with the equity tumbling 1.5% last week in the wake of an uninspiring fourth-quarter earnings report. Longer term, shares of MCD have surrendered more than 14% since topping out at a record high of $103.78 in mid-May, and closed last night at $88.78. Options traders have kept the faith, though, and at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), MCD's 50-day call/put volume ratio of 3.84 ranks just 7 percentage points from a 52-week peak. Should the shares continue to struggle, an unwinding of these bullish bets could translate into headwinds for McDonald's Corporation.
 

Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 

 


 


 
Special Offers from Schaeffer's Trading Partners