Naked Puts on Chipotle Mexican Grill (CMG)
Chipotle Mexican Grill (CMG) went nuts a couple of weeks ago on fantastic earnings. CMG trades at 54 times earnings, but there doesn’t seem to be any stopping it. You’re hedged with its $33 per share in cash, and since earnings just came out, you have a window where not much should happen to the stock.
CMG trades at $681 right now, and you could sell the Aug 8 $670 Puts for $5. That’s $500 in your pocket right now, with only seven days of trading exposure. That 0.7% return is 36% annualized.
If you’re feeling a lot of bravado, sell the Aug 29 $675 put for $16.80. Just beware, that’s only a 2.4% move in a stock priced very high, and you could get it put to you.
As of this writing, Lawrence Meyers had sold Aug and Sep $40 puts against CONN. He is president of Asymmetrical Media Strategies, a crisis PR firm, and PDL Broker, Inc., which brokers financing, strategic investments and distressed asset purchases between private equity firms and businesses. He also has written two books and blogs about public policy, journalistic integrity, popular culture, and world affairs. Contact him at firstname.lastname@example.org and follow his tweets at @ichabodscranium.