Options Brief: McDonald’s (MCD)

MCD – McDonald’s Corp. – The world’s largest restaurant chain posted a 12% rise in second-quarter net income ahead of the opening bell this morning, recording profits of $1.13 a share, which just came in just above average analyst forecasts of $1.12 a share. Shares of the Big Mac-maker fell, however, slipping 3.00% to $69.26 by 12:30 pm (ET) today. One long-term bullish investor, hungry for a rebound and new 52-week high for the price of the underlying shares, appears to have taken advantage of the slight pullback in share price today by purchasing a plain-vanilla debit call spread in the January 2011 contract. It looks like the trader purchased approximately 1,500 calls at the January 2011 $70 strike for an average premium of $4.17 each, and sold the same number of calls at the higher January 2011 $80 strike for an average premium of $0.67 apiece. Net premium paid to establish the spread amounts to $3.50 per contract. McDonald’s shares must surge 6.1% over the current price of $69.26 in order for the call-spreader to start to make money above the average breakeven price of $73.50 by expiration day next year. Maximum potential profits of $6.50 per contract are available to the trader should shares jump 15.50% to surpass $80.00 by expiration.