Chipotle: Options volume hits 8x average as traders buy puts

Eight times the monthly average volume surged in Chipotle options on Tuesday, signaling intense trader activity ahead of the company's earnings report. The market skew was heavily bearish, with 240,000 put contracts changing hands compared to fewer than 17,000 call contracts. This imbalance indicates a strong expectation that the stock price will decline in the coming weeks.

A specific trade structure suggests a shift in confidence among large market participants. At least $2 million of the put premiums resulted from an entity buying back 56,000 November 6 put options with a $25 strike price. This action was taken simultaneously with selling the same number of December put options with a $22.50 strike price. This maneuver, known as rolling down and out, implies the trader expects the stock to fall further and needed more time for that drop to materialize.

Another distinct bearish position appeared around 11:30 a.m. Eastern Time. A buyer purchased 7,500 put options with a $28 strike price expiring on November 20. This transaction, valued at $1.1 million, requires Chipotle shares to drop another 5% within the next 3.5 weeks for the bet to succeed. Jason DeLorenzo, founder of the options positioning platform Volland, noted that these trades align with typical earnings plays where customers generally lean toward bearish positions.

Technical analysts point to the $27 price level as a critical threshold. This figure forms the shoulder line of a head and shoulders pattern that has persisted since January 2021. A break below this line is often viewed by technicians as a signal for further price weakness. DeLorenzo added that the current low implied move for earnings is a rare occurrence, last seen in July 2025. On that prior occasion, the stock experienced a sharp decline following the report.

Chipotle is scheduled to release its earnings results after the market close today. The stock faces pressure from these high-volume bets, with traders positioning for a potential drop below key technical support levels. The November 6 and November 20 expirations will determine the outcome of the specific put positions that dominated Tuesday's trading activity.