Pick Up Protective Puts on Skechers Stock

SKX stock has rallied hard off its late-August lows

Nov 6, 2019 at 10:39 AM
facebook X logo linkedin

Skechers USA Inc (NYSE:SKX) has been rallying sharply since its late-August lows near $29, up 34%. The shares are now trading at $39.09, within a chip-shot of their July 19 annual high of $40.50, but one signal is suggesting it's time to brace for a pullback in the retail stock.

Specifically, SKX stock's Schaeffer's Volatility Index (SVI) -- which measures at-the-money, front-month implied volatility (IV) -- is currently docked at 33%. This reading ranks in the 4th percentile of its 12-month range, meaning short-term options have priced in lower volatility expectations just 4% of the time in the last year.

According to data from Schaeffer's Senior Quantitative Analyst Rocky White, there have been two other times in the last five years that Skechers stock was trading within 2% of its 52-week high while its SVI registered in the 20th annual percentile or lower. Following these prior signals, the equity averaged a one-month loss of 10.6%, with neither return positive.

Given the stock's recent run up the charts, sentiment is upbeat surrounding the footwear specialist. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), SKX's 10-day call/put volume ratio of 6.94 ranks higher than 89% of comparable readings taken in the past year, meaning calls have been bought to open over puts at a faster-than-usual clip.

Elsewhere, 63% of analysts maintain a "strong buy" rating on SKX, and the average 12-month price target of $44 is a healthy 13% premium to current levels. Plus, following a recent round of short covering, just 7.14 million Skechers shares are controlled by shorts, or a low 5.4% of the equity's float. This leaves little in the way of buying power to fuel additional upside for the security.

skx stock daily price chart on nov 6


Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls



Rainmaker Ads CGI