Chipotle Mexican Grill, Inc. (CMG) Bulls Take Short-Term Approach

Chipotle Mexican Grill, Inc. (NYSE:CMG) traders are betting on additional gains before tomorrow's close

by Josh Selway

Published on May 28, 2015 at 10:53 AM

Call buying has been more popular than normal on Chipotle Mexican Grill, Inc. (NYSE:CMG) lately. The stock's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 0.97 is higher than 71% of readings from the past year. This trend is continuing today, as calls are crossing at four times the expected rate.

Breaking it down, it looks like buy-to-open action is taking place at the weekly 5/29 620-strike call. These traders are betting on extended gains beyond $620 by tomorrow's close, when the series expires. To be more precise, the contracts are being purchased for a volume-weighted average price (VWAP) of $4.74, meaning the speculators expect CMG to topple $624.74 (strike plus VWAP) by week's end.

The shares have taken out this level today, last seen 2.4% higher at $627.28. The equity is getting a lift from brokerage firm Miller Tabak, which lifted its outlook to "buy" from "hold," and its price target to $725 from $715, saying a recent pullback "presents an opportunity for solid share price upside in the next few quarters."

The majority of analysts are already in the bull's camp when it comes to Chipotle Mexican Grill, Inc. (NYSE:CMG), even though it's off 8.4% in 2015. Fourteen brokerage firms rate the stock a "buy" or better, with 10 others deeming it a "hold," while zero say it's a "sell." What's more, CMG's consensus 12-month price target of $739.84 represents an almost 18% premium to current levels, and territory that the shares have never before seen.


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