Trade Debate: $SHAK, Long or Short?

It's been a tough environment for restaurant stocks lately however, there are still optimists out there today after the bell as Shake Shack reports earnings.

"‘The burger chain reports second-quarter earnings after the market closes Wednesday. It does so after several fast food joints–including McDonald’s Corp. and Burger King owner Restaurant Brands International–reported sales slowing in the latest quarter. Part of the problem: restaurants are struggling with steeper competition at a time when consumers are spending less money eating out. Whether Shake Shack is able to buck the trend is yet unknown."

Although, traders have placed many bets on their shares rising according to Trade Alert. The most active option was a call option of $45. Additionally, traders also have confidence that the stock will move in the nest three days. Some are expecting shares to move around 7% in either direction, by Friday.

Shake Shack's average post earnings swing is around 10%, therefore 7% is not out of the ballpark given the environment and poor restaurant earnings.

Buy, Sell or Hold?

WSJ