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Mexican food?

February 15th, 2011 · No Comments

Another candidate for selling short-term out-of-the-money calls…
Chipotle Mexican Grill (CMG) might have experienced a renaissance in the economic recovery, we seriously question whether things have not run up too much though. Some basic numbers:

Even if we take that most optimistic EPS of $8.8, that amounts to a forward P/E of 31. That’s pretty rich already, we would say.

And there growth story is not without problems and risks

Add to these problems the rather overbought technical picture and we think once again selling short-term (Feb) out-of-the-money calls (like the Feb 290 ones which can be sold for 45-50 cents) will be profitable..

Tags: Technical Trading Ideas