While the lines for Shake Shack burgers are long, traders don't seem as excited for the stock's puts and calls.
Shares of the New York-based burger chain, trading under ticker symbol SHAK, have captured the imagination of investors. It's been likened to the Tesla of Burgers, as the stock is up more than 23 percent since its IPO, and at one point traded near $100 a share. But so far, investors have found SHAK options, which had been late in coming to the market, far less appealing.
On Friday, when SHAK options officially listed for the first time since the company's January IPO, fewer than 1,800 total contracts (1,296 calls and 485 puts) traded on the day. On a typical day, options volume in names such as Chipotle and McDonald's run a respective 17,000 and 32,000 contracts.
"I think the primary reason for this is if you look at the prices of the options for this stock, they are very high and it can be a little bit confusing," options expert Mike Khouw said Friday on CNBC's "Options Action." "The reason it is confusing is this stock is hard to borrow. There is a small float, and there's a high short interest, and what that means is when people want to short the stock you have to pay up to do that." Khouw noted that as of July 31, short interest in the stock runs at 43.5 percent of the float, per the Nasdaq.