Chipotle Stock Retreats After Restaurant Closure

The stock hit an annual high last Friday

Managing Editor
Jul 31, 2018 at 9:57 AM
facebook twitter linkedin

Just two trading days removed from an earnings-induced 52-week high of $483.29, Chipotle Mexican Grill, Inc. (NYSE:CMG) is selling off. The burrito chain closed a restaurant in Ohio after two reports of food poisoning. In response, CMG stock is down 4.4% to trade at $444.79.

Nevertheless, Chipotle stock received an upgrade to "buy" from "hold" at Jefferies, as well a price-target hike to $550 from $440 -- an 18% premium to last night's close and territory CMG has not traded in since December 2015. The analyst in coverage remains impressed with the company's digital revamping efforts.

Most analysts are staying on the sidelines. At last night's close, 16 of the 23 brokerages covering CMG rated it a tepid "hold" or worse. In addition, the equity's average 12-month price target of $450 sits right at its current perch.

In the options pits, traders have been buying to open puts relative to calls at a quicker-than-usual clip. This is evidenced by data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which shows the security with a 10-day put/call volume ratio of 0.95, in the 88th annual percentile. 

Echoing this, Chipotle stock's short-term traders are more put-skewed than usual, per its Schaeffer's put/call open interest ratio (SOIR) of 1.61, which ranks in the 98th annual percentile.

Despite the pullback today, the security still boasts a 55% lead in 2018. Plus, the shares seem to have found support near $450 -- a level that's served as a floor this month and coincides with CMG's mid-May peak.


Stop leaving money on the table with the same old broken options trading approach...

There is no options strategy that more perfectly capitalizes during earnings season better than this simple call and put buying strategy. Perfect for aggressive traders looking to recover their suffering portfolios so far in 2022. With the simplest possible options strategy, Schaeffer's team with 100+ years of options trading excellence, target 200% gains on every single trade. So many trades are being beaten down by the market, but don't be one of them! Don't waste another second... join us right now before the next trade is released! 

Best stocks for October and worst stocks for October


Special Offers from Schaeffer's Trading Partners