Trader expects big surprise from Chipotle earnings

Earnings season is in high gear, and one trader is expecting a big surprise from one company reporting next week: Chipotle.

Chipotle has been under a lot of scrutiny and pressure from consumers and investors after a health scare last October sent the stock tumbling. Shares are down nearly 44 percent in the last year.

The embattled burrito giant reports earnings after the bell on Oct. 25, and according to Mike Khouw of Optimize Advisors the options market is implying a move of about 8.2 percent in either direction, which is more than the historical 8 percent move. If that move were to play out, it could represent a shift in market cap of $950 million.

"Implied volatility, or the price of options, has been rising — nearly doubling since last month, and puts have been trading calls pretty significantly," Khouw said Tuesday on CNBC's "Fast Money."

"[There's been] a lot of bearish sentiment. I think this one might finally surprise to the upside," Khouw added.

Analysts polled by FactSet are expecting the stock to earn $1.59 per share on $1.09 billion in revenue when it reports next Tuesday.

Chipotle shares were up more than 2 percent in Wednesday's session.

Latest Video


Host Bio

  • Melissa Lee

    Melissa Lee is the host of CNBC's “Fast Money” and “Options Action.”

Options Action Traders

From Our Sponsor

Sign Up for Our Newsletter Options Action

Insight directly from the members of our Options Action panel
Get this delivered to your inbox, and more info about about our products and services.
By signing up for newsletters, you are agreeing to our Terms of Use and Privacy Policy.