Skechers Stock Options Bear Wins Big After Earnings

The May 35 put was popular on SKX stock in recent weeks

Skechers USA Inc (NYSE:SKX) stock is down 14.3% at $30.19, set to snap its four-day win streak.Today's drop is sparked by the shoemaker's first-quarter earnings of 71 cents per shares, which was less than analysts were expecting. The company's quarterly revenue of $1.28 billion also missed the mark, as did its current-quarter profit and revenue guidance.

Heading into today's trading, SKX stock had been making a beeline higher off its late-December lows near $21.50, and hit a 12-month high of $42.75 yesterday. A late-March pullback was contained in the $30-$31 region -- which coincides with the equity's Jan. 31 bull gap high and its 80-day moving average -- and appears to be emerging as support today. Below here is Skechers' 200-day trendline, located at $28.75.

Options traders were positioning for a post-earnings retreat for Skechers stock. In the past 10 days, the May 35 put saw the biggest increase in open interest, with more than 6,400 contracts added. Data from Trade-Alert suggests the bulk of these options were bought back on April 5 for $2.75 apiece as part of a bearish roll. At last check, the now in-the-money puts were bid at $4.70, signaling a big profit for the put buyer.

And in early trading, this penchant for puts is continuing as SKX sells off. Most recently 2,500 puts and 944 calls have changed hands, more than half of the stock's average daily options volume of 5,529 contracts. The April 29 put is most active, and it looks like traders may be liquidating their positions ahead of tonight's expiration.