Wednesday 19 June 2024

Playing MCD to the downside (Free trade)

the Golden Arches are sagging lately…
 
   
     
   
 
JUNE 19, 2024
   
GEOF SMITH’S TAKE
Playing MCD to the downside (Free trade)
 

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 is a dog.

In fact, it’s such a dog that I thought I’d give you a free trade idea.

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 here’s my trade idea:

It’s a put spread on the 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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TUCCI’S TWO CENTS
How I Got Started Trading
 

Since the market is closed today, I thought I would take a step back and share a little more about how I got started in the world of investing. After all, even though I look like a teenager, I’ve been knee deep in the markets for over a decade.

I was one of those kids who was always interested in finance and business. I’ve definitely always had a bit of an entrepreneurial mindset — I remember even as a very young kid being at a restaurant or a store and thinking “If I owned this place, I’d do this or that to make it work better”.

I personally consider capitalism one of the great ideas in history and I loved not only reading and researching about businesses, but running our publishing business here too.

When I was a freshman in college my interest was much more entrepreneurial (i.e. starting and running businesses) than investing…

But I ended up meeting a guy through church who was trading the currency markets and ended up building quite a following online. And it just so happened he needed some help running this business that he had created entirely by accident.

He specifically needed some help managing the actual business side of things. After a summer internship and a tough conversation with my parents, I dropped out of college and went to work for him…

The way I figured it was that I could stay in school and rack up debt in the hopes I would land a good job… Or I could stop taking on debt and land a good job immediately.

It was one of the best decisions I’ve made.

— Nate Tucci

 
   
 

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