Chipotle shares have been decimated by the company’s problems with E. coli and norovirus. But the bad news for lovers of burrito bowls and hot stocks has been good news for those who followed an options strategy suggested by Goldman Sachs.
In a Dec. 2 note, Goldman’s options strategy team suggested buying both bullish and bearish options on Chipotle in order to take advantage of uncertainty around food-borne illness outbreaks.
Strategists Katherine Fogertey and John Marshall wrote that they expected Chipotle to “update investors as to the financial impact” of the E. coli outbreak. Despite the high potential for market-moving news, options pricing “does not reflect the higher uncertainty we see in the coming weeks.” In fact, the options market was actually pricing in less volatility than it typically does ahead of earnings
