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TP Says...
Friday, November 20, 2020
If you’ve ever wondered what the damage a few lawyers can do, last night was a good example.  As President Trump’s team started landing heavy legal blows yesterday in the never-ending election of 2020, stocks sold off after the close on the prospect of political turmoil.  But couldn’t we all use a little more disquietude for the holiday season?  I mean, without politics, what would you be talking to your friends and family about, dry turkey?  Speaking of gastrointestinal turmoil, fast-food companies like MCD and CMG have been relatively flat.  CMG has been outperforming MCD lately, but it, too, has been trading in a wide range over the past three months.  CMG’s near the top of its range though, and it might be an opportunity for a contrarian bear who thinks the rise in COVID and further weakness in the market might take CMG down.  CMG’s 10% IV rank points to long debit spreads for directional strategies.  If you think CMG might drop in the next few weeks and are considering a bearish trade, the long put vertical that’s short the 1307.5 put and long the 1312.5 put in the Dec weekly expiration with 41 DTE is a bearish strategy that has a 63% prob of making 50% of its max potential profit before expiry and that generates $.14 of positive daily theta.
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