A Happy Meal for Every Trader!

05/11/2010 12:01 am EST


Jocelynn Drake

Financial Analyst, Schaeffer's Investment Research

Fast food giant McDonald's Corp. (MCD) reported Monday morning that its April same-store sales, or those from restaurants in operation at least 13 months, rose 4.9%. Same-store sales climbed 3.8% in the US, 5.3% in Europe, and 3.9% in Asia, the Middle East, and Africa.

The shares of MCD gained more than 3% in trading that morning as the broad market rallied back from last week's drubbing. The equity has bounced off support at its ascending ten-week moving average and is sitting on a year-to-date gain of more than 9%.

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Meanwhile, sentiment toward the outperforming stock is far from the optimistic extreme that one might expect. The International Securities Exchange (ISE) has seen an increase in put trading recently, as the ten-day put/call volume ratio comes in at 0.80, which is higher than 73% of all those taken during the past 12 months. In other words, puts have been traded at a faster clip than calls only 27% of the time during the past year.

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Elsewhere, we find that the Schaeffer's put/call open interest ratio stands at 1.08, as put open interest outnumbers call open interest among options slated to expire in less than three months. This ratio of puts to calls is higher than 55% of all those taken during the past year, pointing to a lingering skepticism. Should this pessimism begin to unwind, it could create a fresh wave of buying pressure toward the shares.

By Jocelyn Drake, contributor, Schaeffer’s Trading Floor Blog
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