Earnings Trade of the Day (CMG) 2.1.2012
Reason I like this Trade: Chipotle has been a beast lately and I can not fade this movement, but I can fade the movement of the ATM straddle. CMG is implying a $20 move and it has only moved 5.5% once over the last 4 quarters. In this strategy I will make money as long as CMG does not move more than $23. I think this is a great way to play this stock and we have seen lack of movement in SBUX and MCD which gives me more hope that this trade will work out. If you have any questions please email me at [email protected]
UPDATE 2.2.2012 With the lack of movement in CMG on earnings, this spread that I sold for $3.50 is currently worth about $.20. With no catalyst and only one day remaining, I will leave this trade on in order to not chop up my P&L with commissions. Moving on to the next trade.
UPDATE 2.3.2012 With only hours left in the day, this spread will expire worthless. Another winner and time to move on to the next trade.
UPDATE 2.6.2012 This spread went out worthless, I am happy with the trade, on to the next one.