Visit SchaeffersResearch.com to discover how you can use stock options to complement your investing portfolio.
The shares of restaurant heavyweight Chipotle Mexican Grill (CMG) have had quite the year — nearly doubling in 2019 on a 94% pop, and staging an impressive rebound off their ascending 200-day moving average. The stock seems to have run into a little trouble at the round $840 region, just south of its early September all-time highs. The security was last seen testing its footing right near this area, and CMG just popped up in a study from Schaeffer’s Senior Quantitative Analyst Rocky White that has had bullish implications for the equity in the past.
Daily stock chart CMG
According to White’s modeling, Chipotle’s Schaeffer’s Volatility Index (SVI) of 18.2% ranks in the 1st percentile of its annual range. Data shows that there have been three other times in the past five years the security was trading within 2% of a 52-week high, while its SVI was in the bottom 20th percentile of its annual range. One month later, the shares were up 6.84%. A similar move, from its current perch, would put CMG just south of the $900 level — a new high on the charts.
An unwinding of pessimism among the brokerage bunch could push the stock higher, too. Right now, 18 of those in coverage call CMG a “hold” or worse, while only nine consider it a “strong buy.” Plus, the consensus 12-month price target of $852.57 is only slightly higher than current levels.
The options pits have been unusually bearish, too. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 1.16 puts have been bought for every call during the past 10 days. This ratio sits in the 84th percentile of its annual range, too, suggesting a much bigger appetite for long puts of late. This could create some additional tailwinds, should these players start falling off the bearish bandwagon.