Shake Shack Inc (SHAK) Options Debut to Little Fanfare

Shake Shack Inc (NYSE:SHAK) options volume is light, relative to what many experts were anticipating

by Alex Eppstein

Published on Aug 14, 2015 at 11:41 AM
Updated on Jun 24, 2020 at 10:16 AM

Shake Shack Inc (NYSE:SHAK) options began trading today at the Chicago Board Options Exchange (CBOE) and NASDAQ OMX PHLX (PHLX). While a number of pundits expected heavy volume due to the stock's volatility since going public in late January, so far, just 5,100 contracts have changed hands.

Digging deeper, call volume more than doubles put volume. Most active are SHAK's September 57.50 and 65 calls -- boosted by what looks like a bull call spread, in which a trader bought to open contracts at the lower strike, and sold them to open at the higher. If this theory holds true, the speculator believes the security will rally as high as $65 by September options expiration.

Historically speaking, SHAK was hovering north of $65 as recently as Wednesday. Yesterday, however, the shares got leveled after the company revealed pricing on a secondary public offering. The stock has pared some of those losses today -- up 2.8% at $55.99 -- but has tumbled 42% since topping out at a record $96.75 in late May.

These longer-term technical struggles have prompted pessimism on the Street. For one, a lofty 41.3% of Shake Shack Inc's (NYSE:SHAK) float is sold short. For another, not a single analyst rates the stock a "buy."

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