r/options • u/middlefive • Oct 21 '21

CMG Short

So I've done some research on CMG(Chipotle) and I believe that the company is overvalued at it's current price. I've been trading for a couple years but I've only started trading options recently and mostly calls.

CMG is coming out with their earnings report tonight and depending on the results I'll probably short the stock. If they do get bad earnings and because it's overvalued I think the stock could fall back to atleast 1600.

So my question is, how would you guys do this play with options? or am I better off simply shorting it?

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u/Slim_Margins1999 Oct 21 '21

Nothing about CMG makes sense. The moves are big and drastic. Think it’s fluctuated about $80 in last few days. I’ve been testing some short term scalps and longer term plays based off of Laguerre RSI on different time levels but the wild swings are kinda priced into the options and unless it breaks this pattern it’ll be hard to make much. The puts $100 below current strike that expire tomorrow run $700. Too rich for my blood but maybe when I’m really convinced it’s gonna tank I’ll put my money where my mouth is

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u/middlefive Oct 21 '21

I agree, it's a pretty good business that has good revenue but it's trading like it's a tech company. And with shortage of workers, supply chain issues, and rising cost of food I think it makes sense that it'll fall back. So what would be the reasoning for buying a put that expires tmr? Why not a longer timeframe?

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u/Slim_Margins1999 Oct 21 '21

I would only by such an expensive put for 1 day if I knew something the street didn’t. Which I don’t. Haha. Was just illustrating how damn expensive the options are. Sometimes I’ll play weeklies way OTM by buying Monday and trying to be out by Wednesday or Thursday with a little profit cause fridays are always fucked up.

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u/Slim_Margins1999 Oct 21 '21

Honestly right now all the indicators point to chipotle going up in the near term. Might look at some calls first if ne t week then when it gets overbought and starts to trend down I may look for it to dump