A substantially in-the-money Covered Calls positions was established for this position and the probability that Chipotle's stock will close in-the-money on the options expiration date was 75.2% when this transaction was executed. I chose a strike price with a relatively high probability of assignment (and a substantial 10.3% downside breakeven point protection accompanied by a very high Call options Implied Volatility of 89.3%). The elevated Implied Volatility is a direct result of the uncertainty in the stock price reaction associated with Chipotle's intervening Q3 earnings report next week (which is prior to the October 31st options expiration date).
As detailed below, a potential return-on-investment result is +1.7% absolute return-on-investment (equivalent to +91.0% annualized
return-on-investment for the next 7 days) if Chipotle's share price is in-the-money (i.e. above the $37.50 strike price) and therefore assigned on its October 31st, 2025 options expiration date.
Chipotle Mexican Grill Inc. (CMG) -- New Covered Calls Position
Today's buy/write net debit limit order transaction was as follows:
10/24/2025 Bought 400 Chipotle Mexican Grill shares at $41.10.
10/24/2025 Bought 400 Chipotle Mexican Grill shares at $41.10.
10/24/2025 Sold 4 CMG 10/31/2025 $37.50 Call options @ $4.25 per share. The Implied Volatility of these Calls was 89.3% when this position was established.
A possible overall performance result (including commissions) for this Chipotle Mexican Grill Covered Calls position is as follows:
Covered Calls Net Investment: $14,742.68
= ($41.10 - $4.25) * 400 shares + $2.68 commission
Net Profit:
(a) Options Income: +$1,697.32
= ($4.25 * 400 shares) - $2.68 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If 400 Chipotle shares assigned at the $37.50 strike price at the 10/31/2025 options expiration date): -$1,440.00
+($37.50 strike price - $41.10 stock purchase price) * 400 shares
Total Net Profit Potential (If 400 Chipotle Mexican Grill shares are in-the-money and therefore assigned at the $37.50 strike price at the options expiration date): +$257.32
= (+$1,697.32 options income + $0.00 dividend income - $1,440.00 capital appreciation)
A possible overall performance result (including commissions) for this Chipotle Mexican Grill Covered Calls position is as follows:
Covered Calls Net Investment: $14,742.68
= ($41.10 - $4.25) * 400 shares + $2.68 commission
Net Profit:
(a) Options Income: +$1,697.32
= ($4.25 * 400 shares) - $2.68 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If 400 Chipotle shares assigned at the $37.50 strike price at the 10/31/2025 options expiration date): -$1,440.00
+($37.50 strike price - $41.10 stock purchase price) * 400 shares
Total Net Profit Potential (If 400 Chipotle Mexican Grill shares are in-the-money and therefore assigned at the $37.50 strike price at the options expiration date): +$257.32
= (+$1,697.32 options income + $0.00 dividend income - $1,440.00 capital appreciation)
Potential Absolute Return-on-Investment: +1.7%
= +$257.32/$14,742.68
Potential Annualized Return-on-Investment: +91.0%
= (+$257.32/$14,742.68) * (365/7 days)
