Calls post sixfold increase in $SKX

Skechers USA has held gains from strong quarterly reports last month, and bullish option positions are sprinting higher.

On Sept. 25, Investiute’s tracking system detected the purchase of 3,000 November $26 calls for $1.30 to $1.40 with shares at $24.81. There was no open interest in the strike before the trade took place, showing that this was fresh buying.

Those calls were marked at $8.40 today, more than 6 times their original purchase prices. The stock rallied 30.8 percent in the same time period, a huge move but one that was still far short of the increase in its options on a relative basis. It is the second winning trade in Skechers to be posted on Investitute in the last month.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

SKX was up 0.43 percent today to close at $32.44. The shoe retailer gapped higher after topping quarterly estimates on the top and bottom lines Oct. 19.