Playing MCD to the downside (Free trade)

by ProsperityPub | Jun 19, 2024

The lead article in yesterday’s Prosperity Pub newsletter talked about how McDonald’s is ending a test run attempting to use AI voice recognition in its drive-thrus to increase order speed and accuracy.

McDonald’s goal with this test was to increase order speed and accuracy by eliminating the cost of human labor in its drive-thru. But it seems the

But after a less-than-stellar 2 year run in 100 test stores, the technology is being phased out.

If you’ve been following MCD stock over the past few years, you’ll know it’s gone a whole lot of nowhere, with the stock currently sitting at the same level it first hit back in late 2021.

And compared to the major indexes — which are all up between 3 and 21% year-to-date — McDonald’s is lagging far behind.

In short, as I said yesterday, MCD is a dog.

And I don’t think the fact that they’re scrapping their failed AI ordering system is going to help anytime soon, because they’re going to take a hit hiring new folks and ripping out the AI stuff.

So because MCD is such a dog, I thought I’d give you a free trade idea.

So here’s my trade idea:

It’s a put spread on the MCD options expiring August 16.

Buy the 250 and sell the 235 for a net debit of around $4.35.

Good luck and keep an eye on those key levels I mentioned in yesterday’s article!

— Geof Smith

Disclaimer: As with all our free trade ideas, you should be prepared to manage the trade and have an exit plan before you enter the trade. Consider paper trading to gain experience before risking real cash.

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