SHAK Trade on Jan 12, 2021 15:42 from Marius: Tradervue User Stock Trades.

Sector and capitalization order flow is still taking place in the second week of the year. Technology did have a pullback and drag to open the week yesterday. Strong participation today. Financials, energy, and specifically in the hotels/restaurants/leisures industries have been seeing a continuing bid which where this trade has a factor in check in the big picture overview.

Fundamental Analysis

SHAK is a US and international restaurant chain that offers hamburgers, hot dogs, shakes, fries, and many other menu items. Many similar businesses have been affected negatively by Covid-19. Within this industry includes hotels and other leisure areas. It is within the consumer discretionary sector which as a whole has been doing good to performing. Noticing the macro overview and seeing these sectors/industries have a bid is notable. SHAK had a press release of the Q4 + yearly numbers and it looked to be improving and additionaly adding more restaurants later this year indicating growth. Investors pay attention to the core business models of companies and if there is something unexpectedly better or worse this can act as a catalyst for a strong move in supply/demand of ownership/shares. Recovering sector of the market accompanying a recovering/strong company is something that stands out and gets market participants interested.

Quantitative Analysis

Intraday Fundamentals

RVOL 2.06
AVOL 652.907k
ATR 3.58
Short Float 15.13%
Shs Float 38.33M
Inst Own 99.20%
Market Cap 4.23B

Options Statistics + Tape Reading

SI 3.22
IV 55.94%
IVP 13%
P/C 0.456
VWAP 97.534

Higher amount of calls traded and at 32% at the ASK or above implying upside direction. Of these 34% are in the 21-40 delta. Noting the large call buy of 100 contracts at 135. Noting the out selling activity in the upper 80's - 90's.

(Tape recorded but not included in this review)

Options Positioning

OI 2,054
VOL 71
Delta -.02
Theta -.06
Vega .01
Gamma .01
Prob T 6.19%
Prob ITM 3.15%
MMM +/- 5.356
IV Series 66.01%

Noting the liquidity areas were I'd be able to position well in this strategy and within my R/R parameters. Spreads was reviewed but not used in this scenario.

Technical Analysis

1Y chart showing clear breakout, large and trading at top of range, and elevated volume with more trading done on the ASK. IV is lower implying a possible sustained move in the direction for this recent movement.

Long-term view on the monthly the stock has stayed below overhead supply for 5 years and now breaking out.

Clear breakout above 90 with a retest of an AVWAP from a gap-up in Nov. VPOC around 85/86. 82 as an important HTF inflection. 88 as a MTF inflection.

Trade/Risk Management & Review

Trade was executed with little management needed as the stock continued to have a bid through the week. Noting here the fundamental catalyst and analysis that stood out along with the favorable technicals. The quantitative data was inline as well noticing the liquidity levels.

I should be in more size in these type of trades. I did reserve capital for additional trades throughout the week but did not use. Tested some strategies additionally on another account which came out with great results on the use of spreads to size in larger and at the same time have a well defined risk which reduces margin requirements.

Grading this trade as an A+. These seem like the trades I will be more aggressive in. Earnings are going to be in full swing with the banks just starting this week. The changing fundamentals plays are where I need to put more focus on but still need to clearly define and choose the most appropriate set-ups.