Skechers Options Traders Anticipate Earnings Upside

Skechers stock has been volatile following earnings lately

Apr 19, 2017 at 2:31 PM
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Skechers stock options are on fire ahead of tomorrow night's earnings report. By the numbers, about 10,000 calls are on the tape -- five times the expected intraday rate, and six times the number of puts exchanged. This, as SKX stock has surged on pre-earnings optimism, up 3.9% at $25.87.

Diving right in, the weekly 5/12 26.50-strike call is the most active SKX option, followed by the May 25 call. It seems safe to assume both strikes are seeing buy-to-open activity. In other words, options traders are confident the footwear stock will extend its run higher through the respective expiration dates.

This bullish betting is business as usual for SKX options traders. In fact, during the past four weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have bought to open more than triple the number of calls as puts.

Whether these bets are wise or not is another question altogether. Today's gains notwithstanding, Skechers stock has underperformed over the long haul. Specifically, the shares sport a year-over-year loss of 12.3%.

Adding to the potential risk, SKX stock has been extremely volatile following earnings lately. While the stock jumped 19.3% in the session after reporting in February, the two previous earnings releases resulted in single-day plunges of 17.3% and 22.3% in October and July, respectively. This time around, the options market is pricing in a 17.4% move in either direction for Skechers stock.

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