Shake Shack Shares Slide Ahead of Quarterly Report

SHAK option buyers are bearish ahead of the event

Managing Editor
Feb 22, 2019 at 12:32 PM
facebook X logo linkedin


Burger chain Shake Shack Inc (NYSE:SHAK) is down 1.5% at $52.51 in early afternoon trading, with traders bracing for the company's impending fourth-quarter report. With earnings slated for after the market closes on Monday, Feb. 25, below we will dive into what the options market has priced in for SHAK shares' post-earnings moves.

Shake Shack stock has managed to add 41% since hitting its late-December bottom, and recently retook its 120-day moving average. The equity is now staring up at the $56 region, which capped its rebound attempt in early December, and prior to that acted as a floor for SHAK.

Daily SHAK with 120MA

Looking at the food chain's earnings history, the stock has closed lower the day after six of the last eight reports, including an 13.9% drop in November. Overall, the shares have averaged a 9% swing the day after reporting, regardless of direction. This time around, SHAK options are pricing in a higher 11.6% swing for Tuesday's trading.

Moving on, , it appears option buyers are bracing for another earnings disappointment. Shake Shack's 10-day put/call volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands at 2.46, and ranks in the 91st annual percentile. This suggests puts have been bought to open over calls at a faster-than-usual clip of late. Over this same time frame, the March 50 put has seen a notable increase in open interest -- suggesting buyers expect the stock to travel below $50 by the contract's March 15 expiration.

Meanwhile, short sellers have been piling on, as short interest grew 8.3% during the two most recent reporting periods, and now accounts for 18% of the stock's total available float. At SHAK's average pace of trading, it would take shorts just over one week to buy back their bearish bets.

 

 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI