Gather The Green With Options

The middle of March means only one thing – March Madness! No … St. Patrick’s Day. The day to celebrate Ireland and the wearing of the green, the brilliant writers, the lilting music, the beautiful craggy countryside, and the tough, independent settlers that helped to build America. Options trading investors have much to thank the Irish for, including the many Irish-Americans from Chicago who worked to create the Chicago Board Options Exchange.

It’s that spirit of creativity and hard work that our options experts seek to honor this week with six trades with an Irish theme. Yes, of course, we have the beverage companies, however this is no stereotype as both Boston Beer Company (NYSE: SAM) and Anheuser-Busch InBev (NYSE: BUD) could go far in soothing your investment thirst. And we offer Ireland-based Ryanair Holdings (NASDAQ: RYAAY), Europe’s largest passenger airline. So, take a moment to savor a few trades that just might lead you to the pot of gold at the end of the rainbow.

McDonald’s (NYSE: MCD)

By Chris Johnson & Jon Lewis, The Winning Edge

Though MCD has been overtaken by Subway in terms of restaurant numbers, don’t think the golden arches are beginning to rust. Strong revenue growth in Europe underlies a steady increase in customer traffic that is keeping MCD on top of the highly competitive fast-food world. Healthy food initiatives, new product launches, specialty coffee offerings, and extended store hours are all working to sustain MCD through the tough economy both here and abroad.

MCD stock has been range bound for the past three months, locked between its 100-day and 200-day moving averages, which roughly correspond to 77 and 74, respectively. We look for the stock to break above this range and make a run at the December high near 80. It may take some time, though, especially with so much uncertainty in today’s market. That’s OK; we’ll just buy more time with a longer-term option. Look at the MCD June 75 Call for around three bucks.

McDermott International (NYSE: MDR)

By Chris Johnson & Jon Lewis, The Winning Edge

MDR is in the heavy construction business, primarily in the offshore oil and gas area. Earlier this month, the company missed the consensus earnings forecast by a wide margin, but announced that its backlog grew considerably thanks to several new contracts. That caused the stock to pop more than 16% in just three days.

The shares have since retreated, though, amid the broader market’s pullback. Given that the stock has returned to its 20-day moving average, a trend line that has supported the equity throughout its 130% rally dating back to July, this appears to be an excellent entry point. With the company in the oil and gas sweet spot, jump on board now with the MDR May 24 Call for two bucks or less.

Ryanair Holdings (NASDAQ: RYAAY)

By Michael Shulman, Short-Side Trader

St. Patrick was actually a Roman (Italian) citizen of British descent — my two favorite countries in Europe — and I am half Irish — giving me unique qualifications for recommending two St. Patrick’s Day trades.

Ryanair Holdings (NASDAQ: RYAAY), the leading discount carrier in Europe, is rolling over due to concerns about jet fuel prices and a potential European slow down. Last week, as oil prices stabilized, so did RYAAY stock. No matter — higher jet fuel prices for the foreseeable future are in the bag and so is a European slowdown. My recent trip to Europe and conversations with business people there, especially people in the travel industry, told me vacationers will stay home in droves this spring and summer. Recent growth — or no growth — data from Germany and Britain confirm this.

The stock has broken all possible moving averages and once it pierces the current level when bad news hits — earnings, another spike in oil prices — it could be headed for a free fall. If you think oil prices are going down soon, stay away. Look at mid-summer, out- of-the-money puts.

Diageo (NYSE: DEO)

By Michael Shulman, Short-Side Trader

Diageo (NYSE: DEO) is the owner of Guinness, the national drink of Ireland, though that is but one part of Diageo’s businesses. Still, Ireland is a meaningful component of these sales. This weakness has hit DEO a bit and it has pierced its 10-, 20-, and 50- day moving averages, with several points to go until it hits that big one, the 200-day MA. While many analysts tout DEO as a sure play over time due to its diversified and growing businesses, a lot of this anticipated growth is coming from Asia, and that’s not a place you want to count on for growth for the foreseeable future due to the coming slowdowns in China and sadly, Japan.  Short term, the trade here is to the downside, so look for close-in puts, not later than June, out-of-the-money puts. But do not refrain from having a pint on St. Patrick’s Day, it will not hurt the position.

Anheuser-Busch InBev (NYSE: BUD)

By Jim Woods, Stocks & Markets Writer

At the risk of being politically incorrect, the first thing that comes to mind when I think of St. Patrick’s Day is the festive bouts of excess drinking going on in pubs, bars and restaurants throughout our country. In fact, America’s year-round love of libations has me bullish on adult beverage makers. I’m particularly bullish around St. Patrick’s Day, which also falls about the same time of year when the NCAA basketball “March Madness” tournament sends throngs of beer-swigging fans into sports bars to watch all of the tournament action.

One of the best of breed beer stocks out there is Anheuser-Busch InBev (NYSE: BUD). The makers of the iconic Budweiser and Bud Light brand beer collect plenty of revenue around this time each year, and that could help send the stock, along with the BUD Apr 60 Call higher.

Boston Beer Company (NYSE: SAM)

By Jim Woods, Stocks & Markets Writer

Another stellar brewer stock is Boston Beer Company (NYSE: SAM), makers of the Sam Adams brands. The bold offerings from Boston Beer did well with consumers in the fourth quarter, as Wall Street drank in strong sales and earnings growth. Unfortunately, the company’s numbers fell short of expectations, and as such SAM shares went flat. Still, the company and the stock have proven capable of delivering a nice high to bullish investors. I suspect that high could continue in the first quarter, and that could translate into a nice push higher for the SAM Apr 90 Call.

At the time of publication, Jim Woods held no positions in either SAM or BUD.