Bulls Are Looking to Run With Skechers

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Skechers USA 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 yesterday, 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.

Skechers was down as much as 4 percent at one point yesterday, but reversed and ended higher by 0.99 percent at $21.51. The stock 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 yesterday, with calls outnumbering puts by more than 20 to 1.

—By CNBC Contributor David Russell

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David Russell is a reporter and writer for OptionMonster. Russell has no positions in SKX.