Chipotle Mexican Grill Inc (CMG)

[DowDeva]

The clue was the rejection of the prior high. I wasn't watching at the time.

Went long a 2/3/1 890/880/875 fly for July expiration. Trade taken immediately which usually means there will be further upside, and there was. Placed trade at CMG 3027 and it is currently at 3030.

Will be looking to place a trade in the other direction for an OTM uneven fly with June 12th expiration at around 1080. for a credit.

[ashy2classy]

Thanks. I bailed on my put a couple days ago. Missed out on today. I'm sure it'll tank and I'll puke LOL!

[DowDeva]

CMG reached Hurst s/t Hurst objective of 1027 (not mentioned on board). Next price objective is 880 to 887 if further decline.

Long term Hurst projection of 1200 still on board.

[ashy2classy]

Breaking below the UTL for the first time. Could be time for a fall. We'll see.

http://schrts.co/KKwTDxTu

[Cuppy]

white house TELLING every citizen to get takeout

------


who in their right mind listens to anything coming out of this White House?

[Ferda]

You must he a very healthy eater lol! These smartphone apps are really nice for ordering breakfast, lunch, and dinner I call it the triple threat.

I think a lot of people in and around city areas were ordering food in relatively high frequency before cv19. Now mix in a pandemic and the white house TELLING every citizen to get takeout.

[DowDeva]

Ashy, you might want to roll out to July before you lose your extrinsic value in those puts. I am rolling my SPY puts out to July.

~d

[ashy2classy]

I'm sticking it out for a bit longer. Apparently they're not letting 1056 break today so I guess it's just more up. We'll see. GLTY!

[DowDeva]

Ashy, good afternoon. I'm so sorry. Been there, done that.

I have blown up my account so many times I don't want to think about it. I think you were lucky with your first short and jumped right back in.

Someone recently told me that we are most vulnerable after a succssful trade. I am closing out my 1 put (LOL) today and taking the hit.

It is essential to learn good position sizing and loss management, the big ones keep pounding the table with that over and over again.

Best regards,

~d

[ashy2classy]

Bot a June 19 1000 put when we were around 1061-1063. *GULP*

[ashy2classy]

Range still holding. See what happens the rest of the day.

http://schrts.co/JfMUDEuJ

[ashy2classy]

I just saw the volume bar at the very EOD; I assumed that was an arranged sale for an insider.

[DowDeva]

Ferda,

Take a look at this, very interesting too. I went on the SPY board and asked if everyone was eating take out during the quarantine:

https://investorshub.advfn.com/boards/read_msg.aspx?message_id=156065976

It simply boggles the mind that take out food is outperforming the SPX.

[DowDeva]

Can you show it please? Tia ~ d eom

[ashy2classy]

Appears there was another sell EOD. Insiders taking advantage of these prices.

[Ferda]

My level of options knowledge is about sea level lol! Thanks

[Ferda]

Interesting I didn't know that stuff about the CEO and non GMO. I'll have to check filings more then glance but it looked like he also acquired shares?

I've eaten there frequently for many years. Quality hasn't been huge issue.. varies from store to store is what I've found. But I would also say the majority of people order it delivered or takeout BEFORE cv19. Seems like nobody ever sits in there to eat unless they don't have a car.

Definitely short CMG with any ecoli outbreaks haha! There is a website for tracking foodborne illnesses that I used to track if something was going down at CMG.

But anyways the reason I asked if you ate there is because that would explain some of your questions about why the price is still up. Its a cult food and has turned into a cult stock. It's delicious to most and the multiple delivery platform options make things very streamlined. In a way they are raising the fast food bar. So because of this people are investing heavily (i think).

Also agree that most indicators on the chart say its near short time.

[DowDeva]

Ferda, I don't know your level of knowledge but you might want to start with sellling way out of the money credit spreads on CMG, only on expiration days. For instance, selling the 1070 June 5th call and buying the 1075 would currently net you .25, or 25 dollars.

Trading gurus are always talking about risk/reward ratio, i.e., you don't want to invest a lot of money to make only $25, but one of the best traders I ever saw carefully logged away 25 and 35 at a time, one at a time, risking 500 or even 1000 or 1500, every week. He was betting a lot to make a little very safely.

I watched him hedge too, if he even though the trade was going to go against him. This is because a way OTM credit spread can turn into an in the money credit spread very fast. This is even more true with tech stocks. which more very fast.

He always hedged, even if he was buying, not selling, options. It was about protecting his capital.

[DowDeva]

I don't eat there, but hundreds of people on Yelp say since the new CEO took over it's really gone down in quality.

The first CEO really cared about his product and even said that he didn't approve of GMO foods. 'Coincidentally', there was a subsequent breakout of food poisoning in several of his restaurants. Stock tanks, CEO resigns, new CEO takes over and doesn't mention words like organic and non-GMO and stock recovers to new highs.

Turns out later several scientists found that the strain of food poisoning found in the Chipotle restaurants could only be grown in a lab, it is never found in nature.

So, as an environmentalist, I feel it is my political duty to short this stock, lol.

There's definitely some hand holding going on with the powers that be with this new CEO. He sells over a million shares at a new high? At $1050? During the coronavirus? And the stock doesn't tank?

I want to find out who he hangs with. This kind of thing really makes my blood boil.

Good luck with your decision, Ferda. It's a big one with a stock this pricey.

~d
.

[Ferda]

What are your thoughts on their food?

Very good posts ty. They help me learn. I'm just watching here but enjoy toying with short ideas.

[DowDeva]

Good luck, that is a long shot but possible. It needs the general market to turn down help the downdraft.

You might want to roll it up to 1000, if you can.

~d

[ashy2classy]

Thanks for all your help, DD! I'm holding June 19 900 puts so we'll see what happens. Was hoping for 1000 again, but it's putting me to sleep instead. LOL!

[DowDeva]

Ashy,

if you put on a 30 minute chart with price bars or candles, you'll see big long price bars on the decline down on 5/26 before it found support on 5/27. Those kind of big candles most people get all excited about and think price is going to continue in the same direction. They get all excited and call them 3 or 5 black crows or white soldiers in candlestick charting.

The truth is, on an intraday chart particularly, they usually get 'traded out', i.e., price will retrace to test them BEFORE price potentially goes down in the same direction (or if they even do). That is exactly what happened here with CMG.

However, CMG couldn't make it all the way back up to the top of the first huge candle down on it's retracement to 1086, but only made it partway.

That's important.

There was another big price bar on the 30 minute on 6/1 going up at 9:30. That bar looks likely to be traded out and there is also a gap on 6/29 at 1014. Gaps also act as magnets.

The volume is awful here and that works both ways, up and down. There is volume support around 1024 and 1000, plus or minus, and that should act as a magnet too.

Actually, the real volume support is around 900 or so.

AND THE CEO SOLD ALMOST ALL HIS SHARES!

I have no idea what will happen. But I like these odds.

[DowDeva]

Ashy, do you have a volumeprofile study on your platform? ToS, right?

I want to teach you something.

~d

[ashy2classy]

1035 held it. See what happens next. Maybe test 1060 again?

[DowDeva]

Nope.

Might stall it a bit.

~d

[DowDeva]

This is it, Ashy. Fasten your seat belts. Short @ 1048.

~d

[ashy2classy]

Here's a 60-min chart. Probably not much chance of dropping down through the wedge. If it does 1026 will catch it.

http://schrts.co/WCyhINyt

[DowDeva]

I will use out of the money options if I am confident of a move that may take some time, add to them as my cost declines, and be willing to lose money.

Otherwise that extrinsic value is a killer.

So, when I short CMG - maybe even tomorrow - it will be with a weekly option and with a put with at least a 50 delta. Maybe start with just one contract.

The bottom line is, this range compression will break up or down, and the first move might be a head fake.

I am betting on down, but could be wrong.

~d

[DowDeva]

The biggest mistake I made, and I still make it, is to use OTM or ATM options day-trading because the price is reasonable. And then it's heart breaking to wait around all day and see price go in my direction and I still lost money because of the hourly theta burn.

[DowDeva]

I have no idea. Why are you OTM short?

~d

[DowDeva]

The CEO sold over a million shares on June 1 and only holds 19,000 shares now. How is that for confidence in your company?

It should be going down soon, not up. But for the short term...

Do you know about volume holes? If you put a volumeprofile study on CMG on ToS there is no volume until you get up to about 1061. It's not much, but should serve as resistance.

Those areas of low volume are magnets for stocks, and also gaps.

Also, no one going to this board at all. Way too quiet. Part of it is the stock is so expensive and not a glamour stock too boot, but also should be good for shorting soon. If it was going up, the vultures would be pounding the pavement short here.

[DowDeva]

I was taught not to add to a position until it dropped at least a dollar below my cost. This was for stocks, not options. For options I add another contract or set of contracts not until my cost has gone down one third of my position - and I usually hedge overnight for Globex.

~d

[DowDeva]

Could be, that's why mental stops and position managing is important. I trade technicals, mostly.

~d

[ashy2classy]

And to be honest, I think they're gonna try to take this to 1100. Just don't get it.

[DowDeva]

LOL, I shorted the SPX from 2016 to 2019 on the basis it was too high.

I'm going to post a chart tonight if you'd like.

~d

[ashy2classy]

I'm playing it based on the fact that it's above highs before the COVID crash. Seems insane that it's trading this high given the social environment.

[DowDeva]

Ashy,

What time frames are you using and what indicators? I am going to post a chart later which shows why I kept out of the trade till now, and why I think it's finally getting ripe for some decline soon.

Pending the kind market makers, of course.

[DowDeva]

Only trade over 200 shares that went through was a 301 share sell at 3050.04. Looks like they are definitely holding it up for insider sells.

Most of the rest might be algos trading shares around.

~d

[ashy2classy]

Still holding my June 19 puts. Seems like they're gonna keep it flat forever. ;o)

[DowDeva]

When they're finished, it should drop like a rock. Should be soon.

~d

[ashy2classy]

Seems like it'll never fall. Volume is pathetic. Seems like large volume EOD, either insiders selling or crooks preventing it from falling.

[Cuppy]

technically, do you think it could happen by EOD tomorrow?

[DowDeva]

Still burning theta. When it goes, it should be fairly rapid back to 1000.

~d

[DowDeva]

There is no way this stock should be flying so high during a 3 month period of inane social distancing, masking wearing and everyone terrified their food is going to have koodies in it.


~d

[DowDeva]

Oh yes.


Dipping into puts tomorrow or Friday at the latest.



~d

[ashy2classy]

Insiders cashing in lately...

[DowDeva]

Call ToS and ask why you can't sell credit spreads. Could be you're just not approved for them.

My account dropped below the minimum at one point and I was still allowed to do credit spreads? I might give a call myself. Every since Schwab announced the takeover they have turned into the mafia.

~d

[ashy2classy]

Yeah I'm using ToS. I'll give it another try. Thanks.

[DowDeva]

Really? Is it ToS? Options are not margin-able and there should be no minimum to sell a spread as the long option covers the short option.

Try Tastyworks. I started with 500 in one account and did credit spreads on it as I built the account up.

Terrible platform though. Don't use it for charting and even trades are clunky.