Chipotle's Sizzling 50-for-1 Stock Split: Jim Cramer Recommends Investing, Traders Buzz About Options Play

Chipotle Mexican Grill Inc CMG just pulled off a major move, splitting its stock 50-for-1 after Tuesday's close. Starting Wednesday, shares will trade on a post-split basis, making the stock more accessible to a wider range of investors.

The split, Chipotle’s first, drops its share price from around $3,300 to about $65-$70, a significant shift that has Wall Street buzzing.

Jim Cramer, Michael Khouw Discuss Chipotle Stock, Options Dynamics

Jim Cramer is bullish on the burrito maker, urging investors to hold rather than trade Chipotle stock.

Meanwhile, Michael C. Khouw, Chief Strategist at OpenInterest.PRO, explains the split's impact on options: contracts and open interest multiply by 50 and strike prices are divided by the same amount. This means trading volumes will surge initially but might stabilize over time as the lower price attracts more investors.

Also Read: $100 Invested In This Stock 5 Years Ago Would Be Worth $400 Today

Meanwhile, traders on Reddit are discussing ways to play the stock split.

Reddit Buzz: How to Play the Split

Over on Reddit's r/stocks, user floridamanconcealmnt outlines two strategies to leverage the split:

1. Covered Call Strategy: Buy shares before the split, then sell out-of-the-money covered calls post-split to earn premiums and potentially benefit from share appreciation.
2. Options Play: For those with a smaller budget, buy at-the-money or in-the-money calls after the split, banking on potential upside through Thursday and Friday.

With Chipotle's strong market presence and booming business, these strategies could offer lucrative opportunities for savvy investors.

Whether holding long-term or trading options, there's plenty of sizzle in the Chipotle stock story this week.

CMG Price Action: Chipotle stock was up 1.91% to $3254.58 at the time of publication Tuesday.

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