Bulls running with $SKX profits

It took only two sessions for option traders to quadruple their money in Skechers USA.

On Feb. 6, Investitute’s tracking systems found that 2,500 Weekly $31.50 calls expiring this afternoon were purchased at the same time for $0.45 and $0.50 with shares at $27.43. This was clearly a new position, as open interest in the strike was a mere 4 contracts before that session began.

Those calls traded for as much as $2.05 this morning, more than 4 times their purchase prices. The stock rallied 19.39% in the same time frame, showing how quickly options can far outperform gains in their underlying shares.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

SKX spiked higher by 15.2% to $31.91 today. The footwear retailer topped earnings estimates after the market closed yesterday.