Leave Chipotle Stock Off The Menu This Month

CMG was unable to buck September's seasonality

Deputy Editor
Oct 7, 2021 at 2:05 PM
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The end of the year is quickly approaching, and the months leading up to it tend to be rife with volatility. Because of this, we think its a good idea to keep an eye on stocks that tend to outperform during this tumultuous time; however, it's an equally good idea to familiarize yourself with stocks to avoid, as well. You may be surprised to find Chipotle Mexican Grill, Inc. (NYSE:CMG) as part of the latter group, as the equity has managed a decent 2021 performance so far. Nonetheless, CMG stands out as one of the 25 worst performers in October going back 10 years, according to a list compiled by Schaeffer's Senior Quantitative Analyst Rocky White.

Per White's data, Chipotle stock has seen seven negative one-month returns over the past 10 years, averaging a 3.7% fall in this time period, and is the worst performing stock in its sector. A similar move from its current perch of $1,864.27 would drag CMG back below the $1,800 level. 

It seems like the options pits may have been gearing up for this, as puts have been flying off the shelves at a faster-than-usual rate. This is according to CMG's 10-day put/call volume ratio of 1.72 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which ranks in the 77th percentile of its annual range.

Now could be a great opportunity to weigh in on Chipotle stock's next move with options. The equity's Schaeffer's Volatility Index (SVI) of 26% sits higher than 24% of readings from the past year, suggesting the options market is pricing in low volatility expectations for the equity at the moment.

As previously stated, the stock has fared well on the charts this year, especially after a mid-July bull gap -- stemming from a blowout earnings beat -- launched it above the $1,650 level. In the time since, however, Chipotle stock has received some bearish attention from analysts, and even pulled back below the aforementioned $1,800 mark at the start of the month. Last month, CMG lost 4.5%, with another month of losses potentially on its way. 

 

 

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