3 Reasons Why McDonald's Stock Could Keep Climbing

Now looks like an opportune time to speculate on MCD's short-term trajectory with options

Oct 7, 2020 at 10:29 AM
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Fast food giant McDonald’s Corp (NYSE:MCD) has been steadily rising on the charts, now up 14% year-to-date. Furthermore, the equity has reclaimed its 20-day moving average, a significant trendline in the past, and one which has captured multiple pullbacks since mid-July. With that being said, now looks like an opportune time to bet on MCD’s next leg higher.

MCD Oct 6

Currently, MCD’s 12-month consensus price target of $224 sits right in line with current levels, which may spur some price-target hikes moving forward that could push the stock higher. There is room for some upgrades as well, with seven of the 23 analysts in coverage at a "hold" rating.

The amount of pessimism in the options pits could also arise as a potential tailwind moving forward. MCD’s 10-day put/call volume ratio sits in the 73rd percentile of its annual range, suggesting a higher-than-usual appetite for puts as of late.

What’s more, options traders are pricing in relatively low volatility expectations at the moment, per the stock’s Schaeffer’s Volatility Index (SVI) of 23%, which sits higher than just 13% of all other annual readings. Plus, MCD’s Schaeffer’s Volatility Scorecard (SVS) ranks at a relatively high 80 out of 100, meaning the equity has tended to exceed these expectations during the past year.

Subscribers to Schaeffer's Weekend Trader options recommendation service received this MCD commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

 

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