$SHAK bulls fill up on profits

Bullish option traders filled up on fast profits in Shake Shack (SHAK) today.

Yesterday on Sep. 9, Market Rebellion’s Unusual Activity Service flagged the purchase of 6,800 Weekly $67 calls expiring on Friday, Sep. 11, for $1.10 to $1.60 with shares at $67.06. This represented fresh buying, as open interest in the strike was only 158 contracts before the trades appeared.

Those calls traded up to $5.40 today, at least 3 times their purchase prices. The stock surged 7.89% in the same frame, a large move but nowhere near that of its options.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

SHAK ended higher by 0.92% to close at $68.37 after reaching $72.37 earlier in the day. The fast-food chain rose after New York Governor Andrew Cuomo announced yesterday that restaurants in New York City can resume indoor dining at 25% capacity starting Sep. 30.