Tuesday’s Vital Data: McDonald’s Corporation (MCD), Gilead Sciences, Inc. (GILD) and Intel Corporation (INTC)

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Stocks extended Friday’s rally into Monday, as the major market indices rebounded from heavy loses late last week. The S&P 500 led the way with a gain of 0.29%, while the Dow Jones Industrial Average was close behind, up 0.26% on the day. Options traders fed off the bullish sentiment, sending the CBOE put/call volume ratio to a multiweek low of 0.55.

In the headlines, McDonald’s Corporation (NYSE:MCD) was the biggest loser on the Dow, after Standard & Poor’s downgraded its credit rating on the fast-food giant in the wake of the company’s restructuring/modernization plan. Meanwhile, Gilead Sciences, Inc. (NASDAQ:GILD) was popular among call traders following the Friday’s strong first-quarter earnings report. Finally, Intel Corporation (NASDAQ:INTC) joined a slew of stocks slated to trade ex-dividend this week, including Citigroup Inc (NYSE:C) and Markwest Energy Partners LP (NYSE:MWE).

Tuesday’s Vital Data: McDonald’s Corporation (MCD), Gilead Sciences, Inc. (GILD) and Intel Corporation (INTC)

McDonald’s Corporation (MCD)

McDonald’s unveiled plans to refranchise some 3,500 locations by the end of 2018, as the company struggles to re-energize revenue and earnings. McDonald’s also announced that it would return $8.5 billion in cash to shareholders via share repurchases this year — a move that prompted a credit rating downgrade to “A-” from “A” at Standard & Poor’s.

Options traders appeared to remain hopeful for MCD stock, with 69% of Monday’s volume of 120,597 contracts trading on the call side. Options activity for the weekly May 8 series of options is decidedly call-heavy, with what appears to be spread activity at the May $100 strike (10,384 contracts open) and the May $101 strike (16,440 contracts).

Without additional information, however, this open interest may well represent a bear call spread, with traders pocketing premium if MCD closes below $100 by the end of the week.

Gilead Sciences, Inc. (GILD)

Shares of Gilead Sciences added cushion to support above the $105 level on Monday, as traders remained bolstered by the company’s strong first-quarter earnings report. In case you missed it, Gilead earned $2.89 per share in the quarter, topping expectations for $2.78 per share. Revenue of $7.6 billion versus the consensus estimate of $6.8 billion.

Call activity also spilled over into Monday’s trading session. Overall, some 120,000 contracts traded on GILD stock, with 61% of those crossing on the call side. Short-term out-of-the-money call strikes appear most popular at the moment, with 4,210 contracts at the weekly May 8 series $108 call strike, and another 5,405 contracts at the deep-out-of-the-money 110 call strike.

With GILD lagging in premarket trading this morning, these open calls appear to be hopeful at best unless additional drivers push the stock higher this week.

Intel Corporation (INTC)

Intel, Citigroup, and Markwest Energy Partners LP were among the most dominant stocks in the options pits on Monday, as traders snapped up calls by the armload ahead of the companies’ respective ex-dividend dates. Intel and Markwest Energy trade ex-div today, with INTC shareholders at the close eligible for a dividend of 24 cents per share, while MWE shareholders are eligible for a dividend of 91 cents per share. Citigroup’s ex-div date isn’t until May 7, with shareholders looking at a dividend payout of 20 cents per share.

As expected, all three stocks saw extremely heavy call volume as options traders employ dividend capture strategies to take advantage of the situation. Overall, MWE was the most pronounced recipient of call volume, with nearly 100% of yesterday’s options activity trading as calls for the stock.

As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/05/tuesdays-vital-data-mcdonalds-corporation-mcd-gilead-sciences-inc-gild-intel-corporation-intc-options/.

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