that is true too, but if you look at the history, back in July 2012 - October 2012, it dropped from 404 to 235, that is more than 40% drop. Now, we are only 30% drop from the top. So, there is still room for it to drop further in the short to mid term. I think 500 is very likely, could reach to 450 area if it behaves like 2012. It won't reverse the trend so quickly, the whole time frame will likely take months. In 2012, it re-take the all time high a year later in July 2013!
true, 500 is nothing. But it won't go there in straight line. Big boys will not let shorts to make money that easy. My guess is that it will rebound to 550, and then drift lower to 500 in 2 weeks. Long term, this stock will come back.
The truth is that long term, this stock should do well. People are still going there to eat like in the past. I do not think this will hurt their brand much. Short term to mid term, the stock will be under huge pressure. I was eating at chipotle yesterday. absolutely packed. Huge long line, I was in the line outside the door.
short term re-bounce to 550 is possible. if so, I will sell my stocks. In the mid-term, it should still go down, in my opinion, to at least 500, if so I can cover my bearish options then. This way, my losses will be:
3000 loss in stocks
3000 profit in long put options?
1000 profit in short call options?
this way, I can come out of it with $1000 profit? is this possible?
bought 100 shares of cmg at 580. I should have cut loss quickly at 575, but I was hoping that it will bounce back. then at 545, I realized this is a falling knife and but I was not willing to take the $3500 loss. so i sold January 2017 580 call to get $6500 premium and used the premium to buy January 2016 580 put to protect my stocks (got $1500 net credit). Both options are bearish, at the close, I have $800 profit in the two options, but $4400 loss in the stocks, resulting a net loss of $3600. Now, what should I do now?
100 cmg stocks bought at 580 -- bullish
long 1 January 2016 580 put option -- bearish
short 1 January 2017 580 call option -- bearish