Order Up Some Profits With This Options Trade: Chipotle (CMG)

I would like to talk about Chipotle Mexican Grill (CMG). An interesting aside is that CMG is tying compensation of their top executives to ACTUAL PERFORMANCE.

From Seeking Alpha:

“Chipotle executives now have an even more direct personal stake in the burrito maker's recovery: their pay. According to a new securities filing, the company will grant future stock awards, if its share price rises back to $700 for 30 consecutive days, which is nearly a 38% jump from its current stock price of $507. Chipotle (NYSE:CMG) also shaved the 2015 compensation for both its co-CEOs. Total pay for Monty Moran and Steve Ells last year fell by more than 50% each to $13.3M and $13.6M, respectively, and they didn't receive any bonuses."

After taking out highs from 3/9/2016 CMG is poised to fill the gap up at ~$525.  Beyond that I am are targeting the recent highs at $542.50.

The signal:

Buy the 550/560/565 Broken Wing Call Butterfly for $1.65.  Best case scenario is to be sitting at $560 on April 15th.  If that is the case, we will have a reward to risk ratio over 5:1.

If it stalls out at the recent highs we still model our position to have an ROI of 60.6%.



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