Options Players, Analysts Hungry for Chipotle Stock After Earnings Beat

The equity is up nearly 50% year-over-year

Digital Content Manager
Jul 23, 2020 at 11:32 AM
facebook twitter linkedin

The shares of Chipotle Mexican Grill, Inc. (NYSE: CMG) are down 1.8% at $1,162.40 at last check, after the chain reported second-quarter profits of $0.40 per share on $1.36 billion in revenue, considerably higher than Wall Street's estimates of  $0.35 on $1.33 billion, respectively. The company attributed the strong results to soaring digital sales during the COVID-19 pandemic. As a result, CMG earned no less than 14 price-target hikes from analysts this morning, with one of the most significant ones coming from Wells Fargo to $1,282 from $969.

On the charts, CMG has nearly tripled from its mid-March lows near the $415 level, culminating in its latest record-high of $1,187 -- notched yesterday, July 22. The equity has been breaking records on a monthly basis since May, however, with consistent support from the 20-day moving average in recent weeks. Longer term, Chipotle stock is up nearly 50% year-over-year.

Analysts were largely hesitant toward CMG coming into today, with 16 of the 26 in coverage sporting a "hold" or worse rating, while the remaining 10 called it a "strong buy." Meanwhile, the stock's 12-month consensus price target of $1,182.93 is a 1.6% premium to current levels. 

That bearish sentiment is echoed in the options pits. the last 50 days, 1.27 puts were picked up for every call at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits higher than 88% of readings from the past year, meaning puts are being picked up at a faster-than-usual clip.

Moreover, CMG's Schaeffer's put/call open interest ratio (SOIR) of 2.65 stands higher than 99% of readings from the past year, implying short-term options traders have rarely been more put-biased.

Today's options activity shows calls and puts running at a relatively equal clip. So far, 6,904 calls and 6,917 puts have crossed the tape -- three times what is typically seen at this point. Most popular is the monthly August 1,000 put, with positions being bought to open here. The most popular call contract is the 1,200 call in the same monthly series, where positions are also being opened. 


Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 



Special Offers from Schaeffer's Trading Partners