First Watch (FWRG) Surges 10% on Q3 Earnings Beat and Aggressive Expansion Outlook

Summary
• First Watch (FWRG) rockets 10.09% intraday to $17.45, driven by Q3 2025 results showing 25.6% revenue growth and 7.1% same-store sales.
• Company opens 21 new restaurants in Q3, raising FY25 guidance to $123M Adjusted EBITDA and 20.0%-21.0% revenue growth.
• Options chain sees FWRG20251121C17.5 (175% price change) and FWRG20251219C17.5 (83.33% price change) as top movers.

First Watch’s stock is surging on a blockbuster Q3 earnings report, with revenue growth, margin expansion, and aggressive unit expansion driving optimism. The stock’s 10% intraday jump reflects investor confidence in the company’s ability to scale while maintaining profitability, despite a bearish technical backdrop.

Q3 Earnings and Guidance Fuel Rally
First Watch’s 10.09% intraday surge is directly tied to its Q3 2025 results, which showed 25.6% revenue growth to $316M, 7.1% same-store sales growth, and a 19.7% restaurant-level operating profit margin. The company raised FY25 guidance to $123M Adjusted EBITDA and 20.0%-21.0% revenue growth, driven by 60-61 new unit openings and 4% revenue from acquisitions. CEO Chris Tomasso emphasized operational leverage and margin expansion, signaling confidence in sustaining growth despite high capital expenditures (~$150M). The rally reflects optimism about the company’s ability to execute its expansion plan while maintaining profitability.

Restaurant Sector Mixed as First Watch Outperforms Peers
While First Watch’s stock surged 10%, the broader restaurant sector showed mixed performance. McDonald’s (MCD), the sector leader, rose only 0.5%, highlighting First Watch’s outperformance. The company’s aggressive unit growth (21 new restaurants in Q3) and margin expansion (19.7% restaurant-level operating profit) contrast with peers like Chipotle and Panera, which face traffic declines and margin pressures. First Watch’s focus on daytime dining and brand loyalty (e.g., Newsweek’s 1 Best Breakfast) positions it to capitalize on niche demand, even as convenience stores and grocers encroach on fast-food breakfast markets.

Options and ETF Strategy for Volatility and Leverage
• 200-day MA: 17.63 (above current price); RSI: 33.06 (oversold); MACD: -0.191 (bearish divergence).
• Bollinger Bands: Upper (19.30), Middle (17.12), Lower (14.95). Price near upper band suggests overbought conditions.
• Key levels: Support at 15.62–15.69 (30D), 15.79–15.94 (200D); resistance at 19.30 (Bollinger Upper).

Top Options Picks:
• FWRG20251121C17.5 (Call, 17.5 strike, Nov 21 expiry):
- IV: 73.71% (high volatility)
- Leverage: 15.81% (moderate)
- Delta: 0.522 (moderate sensitivity)
- Theta: -0.0498 (rapid time decay)
- Gamma: 0.1399 (high sensitivity to price swings)
- Turnover: $81,830 (liquid)
- Payoff (5% upside): $0.775 per contract (max(0, 18.32 - 17.5)).
This contract offers high gamma and IV, ideal for short-term bullish bets if the stock holds above $17.50.

• FWRG20251219C17.5 (Call, 17.5 strike, Dec 19 expiry):
- IV: 67.51% (high)
- Leverage: 10.54% (moderate)
- Delta: 0.546 (moderate)
- Theta: -0.025 (slower decay)
- Gamma: 0.095 (moderate sensitivity)
- Turnover: $4,065 (liquid)
- Payoff (5% upside): $0.875 per contract (max(0, 18.32 - 17.5)).
This longer-dated option balances time decay and gamma, suitable for a mid-term bullish stance.

Action: Aggressive bulls may consider FWRG20251121C17.5 for a short-term play if the stock breaks above $18.24 (intraday high). For a more conservative approach, FWRG20251219C17.5 offers time to navigate volatility.

Backtest First Watch Stock Performance
I ran into a technical limitation while trying to automatically extract the exact event dates (sessions in which the intraday high was at least 10 % above the prior-day close) directly from the raw price file. At the moment, our event-date calculator can merge or process existing date lists, but it can’t yet generate new event dates from raw OHLC data by itself. To proceed with the back-test, we have two practical options:1. Fast approximation • Detect days where the closing price finished ≥ 10 % above the previous day’s close (close-to-close jump). • This is easier to compute automatically and usually captures most large intraday surges, but it might miss cases where the stock spiked intraday and then faded by the close.2. Exact approach (preferred, but needs the dates) • You supply (or point me to) the actual dates on which FWRG’s intraday high exceeded the prior close by ≥ 10 %. • I can then run the event back-test precisely on those dates.Please let me know which route you’d like to take (or if you have the event date list ready). Once I have the dates or your confirmation to proceed with the approximation, I’ll complete the event back-test and present the results.

First Watch’s Rally: A High-Volatility Play with Clear Catalysts
First Watch’s 10% intraday surge is underpinned by strong Q3 results and aggressive expansion guidance, but technical indicators (oversold RSI, bearish MACD) suggest caution. The stock’s ability to hold above $17.50 (key support) will determine whether the rally sustains. Investors should monitor the 60-61 new unit openings and same-store traffic trends in Q4. With McDonald’s (MCD) up 0.5%, First Watch’s outperformance highlights its niche appeal. Act now: Buy FWRG20251121C17.5 if $17.50 holds, or watch for a breakdown below $16.69 (intraday low) to trigger a reevaluation.