Chipotle Options See Tenfold Skew Toward Calls Amid Stock Rally

Chipotle Mexican Grill (NYSE: CMG) experienced a surge in bullish options activity Thursday, with traders favoring calls over puts by a staggering 10-to-1 ratio as the company's stock climbed. The significant imbalance suggests strong conviction in near-term upside for the shares, which were up 3.84% to $32.53 in afternoon trading, according to Investing.com data.

Bullish Bets Dominate Trading

By early afternoon, total options volume in Chipotle reached over 78,400 contracts. Of those, approximately 71,277 were calls—contracts that bet on a stock price increase—compared to just 7,138 puts, which bet on a decline.

Several large trades stood out, indicating significant capital being deployed:

• A high-volume October $37.50 call saw 6,758 contracts traded, adding to an already large open interest of over 15,300. This strike price is roughly 14% above the current stock price.
• The January 2027 $40 call was also active, with over 3,100 contracts changing hands. This longer-dated bet targets a price 23% higher than current levels.
• A more measured strategy was seen in a January 2028 $32.50/$35 bull call spread, a structure that profits from a moderate price increase while capping both risk and potential reward.

Volatility Skew Signals Upside Focus

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While the market is pricing in more uncertainty, reflected by a slight increase in 3-month implied volatility, the options skew tells a more nuanced story. The skew, which measures the premium of downside puts relative to upside calls, fell sharply to near zero.

This collapse in the skew indicates that traders are not paying a premium for downside protection. The dynamic suggests a market sentiment driven more by a fear of missing out on a potential rally rather than a need to hedge against a possible downturn.

Context and Market Performance

The targeted strike prices in the options market align with recent analyst commentary. Mizuho and Citi have previously issued price targets of $41 and $45, respectively. The active January 2027 $40 calls appear to price in a recovery toward those levels.

Despite Thursday's rally, Chipotle's stock remains in the lower half of its 52-week range of $28.04 to $42.82 and is down significantly over the past year. While the options activity is overwhelmingly bullish, some of the call buying could potentially be from traders covering short positions rather than initiating new long bets.