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Bulls Looking to Run With Skechers

By David Russell, reporter at OptionMonster

NEW YORK -- Skechers (SKX) has been trending higher, and option traders are bullish ahead of the shoe retailer's earnings report.

OptionMonster's tracking programs detected steady buying in the May 20 calls Wednesday, with more than 2,400 purchased against previous open interest of just 57 contracts. The initial blocks fetched $1.65, but most of the volume priced for $2.05 and $2.10.

Calls lock in the price where investors can purchase the stock. These options stand to generate significant leverage if it continues to climb but will also expire worthless if it doesn't.

The stock was down as much as 4% at one point Wednesday but reversed and ended higher by 0.99% to $21.51. It has been trending higher for the last year and is now bouncing at its 50-day moving average.

The company hasn't yet announced its next earnings date, but last year's calendar suggests that it will occur before the end of April. Total option volume was eight times greater than average Wednesday, with calls outnumbering puts by more than 20 to 1.

Russell has no positions in SKX.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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