McDonald’s (MCD, $62.91, up $0.91) soared with the market yesterday and here’s the quick update. The stock hit a high of $64.29 and still managed to close in positive territory despite the market giving back all of its gains.
The September 65 calls (MCDIM, $0.60, up $0.25) could have been bought for 40 cents shortly after the open and the October 65 calls (MCDJM, $1.65, up $0.50) were going for $1.25. The September calls traded as high as $0.80, an easy double, while the October calls traded well above $2.
Normally because of such the tremendous gains you would have made yesterday had you bought the options shortly after the open and selling before the close, it would have wise to close the trade. When you make 50% or 100% gains in one-day – SELL! Don’t ever fell like you did the wrong thing by selling early.
As we witnessed yesterday, it only takes a 3% move in a stock to make a 100% return on an option investment. McDonald’s could give back some of its gains from Tuesday and the calls may even get back to our original levels or lower. Then again, they may continue higher from here. Everybody has different investment goals and risk tolerances. The market is providing us excellent opportunities for one and two-day trades so take advantage of it.
Rick Rouse
Rick@OptionsMentoring.com
