Shake Shack ceded its year-to-date breakeven level last month
Restaurant stock Shake Shack Inc. (NYSE:SHAK) is up 2.5% to trade at $79.17 at last check. Prior to today, SHAK had only turned in three gains in the last 12 trading days. Does this recent slide change the investor perspective on Shake Shack?
The 7.7% slide from SHAK in the last 30 days has sent the stock below its year-to-date breakeven level. Along the way, the shares' descending 40-day moving average has kept a lid on any breakout attempts.
A short squeeze could help SHAK break past that trendline. Nearly 10% of the stock's total available float is sold short, and at its average pace of trading, it would take shorts more than a week to buy back their bearish bets.
Moreover, Shake Shack stock’s forward price-earnings ratio of 169.49 provides a sense of optimism in the company being able to produce o the bottom-line. Overall, SHAK is perhaps one of the most intriguing growth plays that operates in the restaurant industry and Shake Shack stock is an even more attractive investment after losing nearly half of its valuation.
Now looks like an ideal time to utilize options, seeing as SHAK premiums can be had for a bargain. The equity's Schaeffer's Volatility Index (SVI) of 48% stands higher than just 18% of annual readings. This means options traders are pricing in low volatility expectations for Shake Shack at the moment. What's more, the stock's Schaeffer's Volatility Scorecard (SVS) ranks at 72 out of 100, indicating the equity has tended to exceed options traders' volatility expectations of the past year -- a boon for buyers.