Mike Khouw Expects A Move Higher In Chipotle After Earnings
He said that the company is going to report earnings on October 25 and the options market is expecting a move of 8.2 percent in either direction for the event. He added that the implied move represents a market capitalization swing of around $950 million and it is bigger than the historical move on earnings of 8 percent.
Implied volatility has been rising and it nearly doubled over the last month. He also noticed that puts outnumbered calls in the same period. Despite the bearish sentiment, Khouw believes that the stock might surprise on the upside.
The stock closed Tuesday at $393.96 after being downgraded at Raymond James.
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