One End of Day Put Play

Add CMG Puts

By Bryan Bottarelli
Friday, June 20, 2008 1:38 PM EDT
Fri, 20 Jun 2008 17:38:00 GMT

PLAY: Buy the CMG July 90 Puts (CMG SR) at or under $4.80, good for the day.

Dear Bottarelli Research Member,

Another round of brutal selling pressure looks to cap off our week of trading — and the Dow is just about to re-test its lows of the day. So as we wrap up a very bearish week, I’d like to re-establish a new round of downside protection — and today’s candidate comes in the form of Chipotle Mexican Grill (CMG – NYSE).

CMG

As you can see from the CMG chart, the owner and operator of 704 cast-casual Mexican restaurants was once a high-flyer — but has since fallen on hard times. And the catalyst for such a fall is easy to isolate: Food Inflation.After all, we’ve all heard about the flooding in Iowa and the across-the-board increase in basic food prices. Since a major part of CMG’s cost structure are items like corn, rice, wheat, and chicken, it’s easy to see that today’s price increases are cutting into CMG’s bottom line. Therefore, after yesterday’s slight up-tick, the stock looks ready to make a move towards a new low. Let’s profit off this move using July puts now!

PLAY: Buy the CMG July 90 Puts (CMG SR) at or under $4.80, good for the day. Place a protective stop limit at $2.50, but do not place a pre-determined sniper sell at this time. I’ll manage the sale of this position within our daily alerts.

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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