Options Bears Unwrap Chipotle Stock After Earnings

However, no fewer than 13 analysts raised their price targets on CMG

Deputy Editor
Feb 3, 2021 at 10:42 AM
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Joining the broad market lower today is Chipotle Mexican Grill Inc (NYSE:CMG) stock, last seen down 2.9% to trade at $1,474.96. The burrito chain reported fourth-quarter earnings per share of $3.48 -- lower than the expected $3.73 per share estimate -- while revenue was in-line with expectations. Despite the mixed report, CMG was pummeled with bull notes this morning, with no fewer than 13 analysts chiming in with price-target hikes. Most noteworthy, both Cowen & Company and Bernstein raised their price objective's all the way to $1,900. 

Today's pullback has CMG falling from yesterday's record high of $1553.55. The shares are now contending with their 10-day moving average -- a trendline that before today had only been breached once in the last four weeks. Nevertheless, Chipotle stock is still up over 75% year-over-year. 

Over in the options pits, sentiment has rarely been more pessimistic in the past year. This is per CMG's 50-day put/call volume ratio of 1.68 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio stands in the 92nd percentile of its annual range, meaning long puts are being picked up at a much faster-than-usual clip. 

Today is more of the same, with puts trading at four times the average intraday amount. The weekly 2/5 1,430-strike put is most popular, and there are also new positions being opened at the 1,450 strike from the same series.

 

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