MCD and mad cow disease

[squiffy]

Case of mad cow discovered in WA state. This totally sucks and I am glad I am not in MCD now, one of my favorite stocks. This is the kind of nightmare scenario that requires diversification.

MCD down about 3% so far.

Though if you do not believe that mad cow will ever become a seriuos problem, MCD may be a good buy again if it stabilizes.

Again, very tough to quantify the fear and danger associated with these scares.

[mosta]

I make markets in MCD options. On the day of the news there was a little vol pop, but it settled pretty quickly, coming in even that same day. I'm surprized it settled so quickly, and am a little nervous about being too complacent (eg not buying my short Jan 22s). The 25 line has been hit pretty solidly in Jan and Feb. Interesting.

[squiffy]

Cool. I am glad you are posting here. It is great to have someone who deals in options to explain some things. I love studying economics, stock investing, and real estate investing and hope to have some good discussions here.

I am a former school teacher and now a lawyer. Back in my school teacher days I had a lot more free time to study investing. BUt now as a lawyer, I have internet access at work!!!! So I guess there are always trade-offs.

I have also been thinking about trying out the motley fool discussion boards. But don't know much about them.

[adios]

"This is the kind of nightmare scenario that requires diversification."

Yep. The "Mad Cow" type news that MCD was hit with is called event risk and portfolio theory states that investors aren't paid a risk premium for undertaking individual company risk (event risk is a part of individual company risk). Therefore to accept a lot of individual company risk, the stock would have to be severely undervalued. It would have to be undervalued to the point that leveraging something like SPY to accept as much risk would yield clearly worse results.

[bad beetz]

my Wendy's stock is not happy, but I am after just having eaten a big ass steak at Outback. Outback good. yum. Hope I don't get mad cow.

Eating out now is fun and exciting like unprotected sex.

[BradleyT]

With the fast-food low carb craze and Atkins mania sweeping the country, I'm suprised MCD hasn't joined the foray.

In fact they already have low carb items (Chicken bacon ranch salad has 6g net carbs) but I have yet to hear any marketing touting that fact.