Chipotle Stock Extends 2022 Losses Ahead of Earnings

CMG fell more than 15% last month

Deputy Editor
Feb 7, 2022 at 1:07 PM
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Restaurant concern Chipotle Mexican Grill, Inc. (NYSE:CMG) is down 2.1% to trade at $1,453.31, just ahead of the company's fourth-quarter earnings report -- due out after  the close on tomorrow, Feb. 8. Below we will take a look at how CMG has been faring on the charts, and see what the options market is pricing in for the stock ahead of the event. 

Chipotle stock just experienced a historically uncharacteristic month on the charts. Specifically, CMG landed second on Schaeffer's Senior Quantitative Analyst Rocky White's list of 25 best stocks to own in January, averaging a 7.1% return during the month in nine out of the last 10 years. However, the equity lost 15% in the first month of 2022, falling to $1,296.79 on Jan. 24 -- its lowest level since May. Year-over-year, the stock is down 3.4%.

CMG Chart February 7

Things could get worse for Chipotle stock before they get better, if the company's earnings history is any indicator. CMG has suffered negative next-day returns during all but two of the past eight quarters, averaging a 5.4% swing, regardless of direction. This quarter, the options market looks to be eyeing a much higher post-earnings shift, pricing in a 13.7% move.

Optimism is prevalent in the options pits, per Chipotle stock's 50-day call/put volume ratio of 1.28 at the  International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio stands higher than all other readings in its annual range, meaning long calls have never been more popular in the last 12 months.

Echoing this, CMG's Schaeffer's put/call open interest ratio (SOIR) stands higher than just 1% of readings from the past 12 months. In other words, short-term options traders have rarely been more call-biased.

 

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