This week's unusually bullish options activity on McDonald's continues, as one trader stakes $5.5 million in a massive bet on the fast food giant. It will make money only if McDonald's shares continues to rise through January.
It was Thursday's single biggest options trade on any stock in terms of the number of contracts traded. Specifically, the trader bought 38,786 January 95-strike calls on McDonald's for $1.41 per share. Since each call contract controls 100 shares of stock, this trade cost the buyer $5.47 million in options premium.
For the trade to make money, McDonald's needs to rise above the $95 strike price by more than the $1.41 being spent by January expiration—or above $96.41.
McDonald's shares were at about $92 when the trade was made, meaning the trader was looking for a 5 percent rise. However, the stock has powered higher since the trade, so only 3 percent gain from Friday's opening price is needed.
As the stock has cooperated, the value of those calls has risen substantially. Bought at $1.41, their value at Friday's open was $2. That means the trader has enjoyed a $2.3 million profit already.