11:15AM

Chipotle Mexican Grill (CMG, $102.95, down $6.95) reported higher-than-expected profits for the quarter yesterday as new restaurant openings fueled higher sales. Income was $17.3 million/ $0.52 a share, up from $12.4 million/ $0.38 a share from Q107. Revenue came in at $305.3 million, up from $235.5 million. Wall Street had forecast $0.48 a share on $298.4 million in revenues.

The company beat by four cents and also reported a 10% increase in sales at stores open at least a year which is the true measure of growth. While most restaurants would be thrilled to be in the 7%-8% range given the current economic environment, Chipotle is posting double-digit growth. Wow. Impressive results to say the least but the stock is selling off hard today (-6%) and is down $12 from from my 4/22 blog.

The May 105 puts (CMGQA, $7.17, up $1.47) were profiled at $4.50 when I noticed the option activity building and are now up about 60%. Great return but this would have been a risky trade by buying only puts going into earnings, especially given the good results. However, people do it all the time. Some win, some lose but that’s the chances inexperienced option traders will take.

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Rick Rouse
Rick@OptionsMentoring.com