How Greedy are you Mr. Market?

We are in the middle of one of the sharpest and strongest rallies in history. Today, the VIX got below 33 for the first time since September. That is at the upper end of a historically normal range for the VIX. I personally think valuations were just too cheap in early March and we've bounced off of very oversold levels. A VIX that low tells me that people are not expecting to retest the March lows, to which I agree. However, I expect and hope that the rally stagnates at this valuation level. I have already taken more agressive positions in AAPL short puts throughout this rally. Mr. Market wants me to get even more aggressive. I think I'll wait until my short AAPL put expires worthless.

On another note. I am kicking myself of late about CMG. I am a big Chipotle fan, believe in the company and management. I'm pretty sure 100 shares of Chipotle held til retirement would leave me a happy camper. At it's current valuation $80, I think it's a little too expensive of an entry. When it was in the 50s a couple months ago, I thought about opening a position and was deterred by the extremely large short interest. At the time 50% of float was short, the most out of any stock in the S&P 1500. I thought it was odd that Chipotle, a well managed company that will definitely survive the recession would be a favorite for the shorts. I totally forgot about the B shares!!!

CMG.B shares are trading at a significant discount to the A shares, even though B shares have 10x the voting power of A. Apparently, shorting the A shares and buying the B shares was a popular pair trade. So many people did it, that CMG has gotten much more volatile with some short squeezes that exacerbated the B share discount. Chipotle management addressed the B share issue in their latest conference call, and are investigating ways they could merge the B shares into the A. Anyways, I was dumb for not taking the little bit of extra effort to investigate the A and B share pair trade that accounts for the high short interest.

Disclosure: short APPL put option