CEO Steve Easterbrook was ousted after the board deemed a consensual relationship he was having with an employee inappropriate
The shares of McDonald's Corp (NYSE:MCD) stock are trading lower this morning after the company fired its Chief Executive Officer Steve Easterbrook for a consensual relationship with another employee that the board deemed inappropriate. Easterbrook in an email said the relationship "was a mistake," and that it was time for him to move on. McDonald's USA president Chris Kempczinski will be taking over the role, effective immediately.
The news has already pulled a price target cut from Citigroup to $216 from $221, which put MCD's consensus 12-month price target at $221.89 -- a roughly 17% premium to current levels. Sentiment surrounding the blue chip has been mostly bullish, though, with 18 of the 23 in coverage calling it a "buy" or better."
Options traders are piling on, with 32,000 calls and 34,000 puts across the tape so far -- eight times the intraday average. The weekly 11/8 187.50-strike put is the most popular, followed by the weekly 11/8 190-strike call, with contracts being bought to open at both positions.
While puts seem to be in focus today, the options pits of late have been more call-heavy. During the past 10 days at the the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 1.91 calls have been bought for every put. This ratio sits higher than 72% of all other readings from the past year, too, indicating this preference for bullish bets is unusual.
Since running out of steam just below its early August record highs at the $220 region, MCD has been chopping lower -- suffering a bear gap last month following a quarterly profit miss. While the $192 region provided some support last week, the stock just sliced through this level to test its footing at the 320-day moving average -- a trendline it's been north of since October 2018. Now, the stock is down 2.1% at $190.01, and hit a seven-month low of $188.25 earlier today.