Tim Biggam's McDonald's Trade

Tim Biggam of Delta Derivatives spoke on Bloomberg Markets about a bearish options strategy in McDonald's Corporation (NYSE: MCD).

Biggam noticed that implied volatility in McDonald's is very low, which makes its options very cheap. He wants to take a short position because price-to-earnings ratio for the stock is at its highest level in over five years. Low volatility allows him to use a simple options strategy, so he wants to buy the June 125 put for $1.90. The trade breaks even at $123.10 or 4 percent lower from the current stock price.