Weekly Calls Hot as Chipotle Mexican Grill, Inc. (CMG) Sizzles

Chipotle Mexican Grill, Inc. (NYSE:CMG) has added almost 5% today, after Krispy Kreme Doughnuts (NYSE:KKD) agreed to go private

by Josh Selway

Published on May 9, 2016 at 1:15 PM

Chipotle Mexican Grill, Inc. (NYSE:CMG) is booming today, up 4.6% at $453.77, on pace for its best close since the stock's post-earnings sell-off late last month. The move comes after sector peer Krispy Kreme Doughnuts (NYSE:KKD) agreed to be taken private by JAB Holding Co. -- the same firm that purchased Keurig Green Mountain Inc last December. While CMG stock is still more than 40% below its all-time high of $758.61 from early August, options traders are taking action amid today's surge. 

By the numbers, 8,482 CMG call options have traded, or 1.4 times the average intraday pace. The weekly 5/13 series -- which expires this Friday -- is in high demand, accounting for nine of CMG's 10 most popular options. The two most active are the weekly 5/13 450- and 460-strike calls. It's possible traders are buying to open positions here, anticipating extended gains from the stock through Friday's close. 

On the one hand, this accelerated call buying goes against the recent trend seen in CMG's options pits. Over the past two weeks, put buying has outpaced call buying at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). However, the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.92 lands in the low 25th annual percentile, meaning short-term speculators are actually more call-skewed than normal

Elsewhere, short interest continues to edge higher on Chipotle Mexican Grill, Inc. (NYSE:CMG), and increased by 7% over the past two reporting periods. Now, 10.6% of the stock's float is sold short, representing a healthy three days' worth of buying power, going by average daily trading volumes. 

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