Yummy Burritos (CMG + 53%, +155%)

I like 3rd Friday of every month i.e. Equity Options Expiration Friday and if this happens to be an earning announcement day, even better.

cmg-intraday-ta.png Chipotle Mexican Grill (CMG) announced great results, a 61.8% rise in fourth quarter earnings, revenues for the quarter grew 31.5% from last year, yet missed “growth” estimates and was punished. It may turn around, but at least today wasn’t the day of yummy burritos for CMG shareholders.

cmg-intraday-feb-15-08.png I decided to play straight puts on this for a very short duration, in a cheap way. Feb expiration is today, so hardly there is any time premium left in the options. Chose to play with 95 and 100puts for $0.45 and $2.33 respectively. Sold for $1.15 and 3.43 respectively, all within 30mins.

BTW, Berkshire Hathaway has just disclosed positions as of Dec 31 and Krafts (KFT) was a surprise for some. Glaxo (GSK), Carmax (KMX) and Wells Fargo (WFC) are included in the portfolio. If you are looking for all the holdings, click here.

Profitable trading, OP

Till next option expiration friday, Profitable trading, OP







3 responses to “Yummy Burritos (CMG + 53%, +155%)”

  1. Jim Collins Avatar
    Jim Collins

    Nice trade. Why did you go with the puts rather than the calls or a straddle?

  2. OptionPundit Avatar

    Thanks Jim. I was expecting it to fall to $94 before bouncing back..so opened two layered puts..

  3. Jim Collins Avatar
    Jim Collins

    Ok, thanks, but why did you expect it to drop?

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