Market Shadows is selling a put on McDonald’s Put
Market Shadows sold one put contract on fast food giant McDonald’s (MCD) this morning after the shares opened weaker despite posting a decent earnings report.
We received $12.90 per share ($1,290) for the January 2015, $100 strike price put.
Our break-even price becomes $100 (the strike price) – $12.90 (the premium per share) = $87.10.
Our maximum profit is limited to 100% of the money we took in today–$1,290. We keep the entire $1,290 if MCD is trading at or above $100 on the January 17, 2015 expiration date. Our worst-case scenario occurs if MCD is trading below $100 on expiration date. If MCD is trading below $100, we will be obligated to buy 100 shares for $100 per share. Because we took in $12.80 per share, our net cost would be $87.1 per share, or $8,710 for the 100 shares.