Chipotle stock is sizzling.
Shares of the fast-food giant are up nearly 10 percent in the past month, and traders are expecting even bigger moves following the company's fiscal 2015 second quarter earnings report after Tuesday's closing bell.
According to Nathan, an 8 percent move is roughly in line with the four-quarter average, however, in the past three quarters, the move has resulted to the downside. "Over the last year investors have shot first and asked questions later, with the stock declining an average 7 percent the day after the last three quarter results," said Nathan, founder of RiskReversal.com.
Nathan noted that investors should be a "tad cautious" with Chipotle stock approaching the $700 level. "Chipotle shares are basically unchanged on the year, but it just bounced off of that $600. It rallied almost 13 percent in the last two weeks in almost a straight line," he said. "I think you should actually be a little cautious here, as a lot of the good news can already be priced in over the last two weeks."