In our Lighthouse Point Options Swing Service webinar on September 19th we discussed the potential future movement in McDonalds Corporation.
Ron Ianieri shows horizontal support and resistance areas along with the 50 day moving average to show how the stock has moved in the past.
These tightened areas formed a consolidation pattern after a decent drop in the stock price combined with the 50 day MA.
So here is what the chart looked like at 9Am on Sept 19th:
The initial trade alert clearly stated:
Buy the MCD September 22nd expiration 155 strike calls with the stock up above the 50-day SMA and in an up or bullish market.
Target Price – To the upside, we have room to a flat line resistance at about $158.95. After that, it looks like the next target would be $160.00
So on the 20th the stock open inside the range of the previous day above the 50 day Simple moving average, so our members had a chance to get in if they liked the research. The Sept22 155 Calls were trading for around $2.5 on the open.
On Sept 21, along with the market, MCD opened higher and proceeded to trade up and close on the high of the day $159.88. The 155 Calls were bid $4.50 for a $2.00 profit. Ron pushed out an alert that suggested to roll up the calls or exit with this type of move. The trader always has to ask themselves…with 2 days to expiration, what is the potential of this position. If you decided to hold to try to break through the 160 resistance and held until the next day, you may have given up a roughly a $1.00 with the option closing on the bid of $3.45. Normally with such a quick action and reaching a resistance area, most traders will completely exit the trade and wait for a slight pullback to see if it can break through that 160 level. If you were quick to act you made a nice score of 80% ROI in 2 days.
Here is a recent snapshot to show you the price action:
Here is the webinar snippet talking about MCD: