Technically speaking, Chipotle Mexican Grill, Inc. (NYSE:CMG) has been an outperformer on the charts, gaining more than 95% year-over-year, and more recently, outperforming the broader S&P 500 Index (SPX) by north of 15 percentage points during the last 60 sessions. What's more, the shares gapped about 16% higher on Oct. 18 alone -- thanks to a well-received quarterly earnings report -- and went on to tag a record peak of $550.28 a month later. Meanwhile, the stock's subsequent pullback was contained by its 40-day moving average, which has served primarily as support over the past year. This technical strength -- combined with skepticism from the Street -- could be setting the burrito chain up for additional gains.
Digging into the security's sentiment backdrop, options players have been notably bearish toward CMG in recent months. The stock's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio sits at 1.49, indicating puts bought to open have outpaced calls during the last 10 weeks. In fact, this ratio ranks higher than all other readings taken over the past 12 months, signaling traders have been snatching up puts over calls at an annual-high clip.
In a similar vein, Schaeffer's put/call open interest ratio (SOIR) for CMG checks in at 1.30, confirming puts outstrip calls among options slated to expire in the next three months. This ratio registers in the 75th percentile of its annual range, reflecting a healthier-than-usual appetite for near-term puts over calls lately. An unwinding of these positions -- particularly at out-of-the-money strikes -- could serve as a contrarian tailwind over the next couple of months.
Elsewhere, although short interest on CMG declined by 11.9% during the past two reporting periods, these pessimistic bets still make up a healthy 7.4% of the stock's available float. It would take more than six sessions to buy back these shorted shares, at the security's average pace of trading. Should the equity continue to head north, it could end up benefiting from future short-covering activity.
Also of note, sentiment among the brokerage bunch is evenly divided, as the stock maintains 11 "buy" or better ratings, compared to 11 "hold" or worse suggestions. In addition, the security's average 12-month price target of $519.67 denotes a discount to CMG's current price at $523.53. This leaves the door open for a wave of upgrades and/or price-target hikes, which could help push the shares even higher.
Speculators wishing to wager on another run higher for Chipotle Mexican Grill, Inc. (NYSE:CMG) may want to consider buying the stock's in-the-money March 2014 490-strike calls, which are presently asked at $53.00. Traders should be aware that the restaurateur is tentatively on tap to report fourth-quarter earnings between Feb. 3 and Feb. 7, 2014.
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