Goldman Sachs lovin' McDonald's options

Investors should buy bullish McDonald's Corp. options because they are at near record lows and the world's largest restaurant company may rally on stronger-than-estimated earnings and a smoothie introduction, Goldman Sachs Group Inc. said.

Equity derivatives strategists John Marshall and Maria Grant recommended purchasing June $70 call options to buy the shares, which slipped 0.3 percent to $67.81 yesterday to pare this year's gain to 8.6 percent. Implied volatility, the key gauge of options prices, is 15.76 for three-month contracts, near its record low of 15.03 on March 23.

"Potentially strong April earnings and a national smoothie launch in May are drivers for upside," the strategists wrote. The product "should be rolled out nationwide by Memorial Day, potentially creating volatility in May."

The New York-based strategists cited Goldman analyst Steven Kron, who recommends buying the shares and says they may advance on accelerating profit margin gains and lower commodity prices. Oak Brook-based McDonald's may report first-quarter profit excluding some items of 96 cents a share, the average of 17 estimates in a Bloomberg survey, when it releases results April 21.