Chipotle Earnings Trade Ideas

• Posted by Greg Harmon
• on October 20th, 2015

Chipotle Mexican Grill, $CMG, reports earnings after the close tonight. This is an excerpt from a Webinar I did on it today, explaining how I look at earnings. All charts and pricing were from Monday closing levels, so may have changed slightly.

Chipotle, $CMG

The chart

The options

The set up

The stock jumped higher in July into earnings and then consolidated in an ascending triangle. It has remained there since. The targets on a break to the upside are 840 and 860. But momentum is stall, running flat in the RSI and MACD. Bollinger Bands are flat as well. The historical move has been 7.8% or about $56 and the ATM Straddle is pricing a $52 move. Open interest is outsized at the 700 Put Strike.

Trade 1: Sell a 700/760 Strangle for $28.
Trade 2: Buy a 720/750 1×2 Call Spread for free.
Trade 3: Buy a 720/685 1×2 Put Spread for free.
Trade 4: Buy a October 23 Expiry/November 760 Call Calendar for $5.50.
Trade 5: Buy a October 23 Expiry/November 760 Call Calendar and sell the October 23 Expiry 660 Put for a $1.50 credit.

Trade 1

Trade 2

Trade 3

Trade 4

Trade 5

Get my ebook, Markets for 2015 and Beyond, a long term forecast with all proceeds going to charity.

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