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Plenty of retailers report earnings in the coming week. Three of them caught my eye. Each tends toward serving middle- to higher-end customers, thus fitting in with my investment thesis that, recovery or not, upper-echelon spenders will lead the economic way.

On the heels of blowout reports from Polo Ralph Lauren (NYSE:RL) and Nordstrom (NYSE:JWN), Saks (NYSE:SKS), Williams-Sonoma (NYSE:WSM) and Ann Taylor (NYSE:ANN) all report next week.

I've been bullish on SKS for a while and, frankly, it has not paid off. However, insider buys outnumber sales over the last six months and short interest is high. Plus the sector is on a roll.

Granted, SKS has lost serious value since I first recommended it at around $11.41 at the beginning of July. It closed this past Friday's session at $8.60. At these levels, I would go long SKS ahead of Tuesday morning's report. It's a bullish sign that Saks crushed July same-store sales estimates.

A relatively low-risk way to play it is to buy SKS January 2012 $7.50 call options. As of Friday, you could pick one up for $2.00, about a quarter of what it would cost to go long 100 shares of the underlying stock. Out of the group of mid- to upper-end retailers, SKS is probably most risky, but it's a speculative play I would be comfortable making.

click to enlarge images

(Charts courtesy of FreeStockCharts.com)

Late last week, OptionMonster reported bullish option activity in WSM contracts. Traders sold several thousand WSM August $29 puts, suggesting they see a bottom in the retailer's shares. I agree.

The company beat expectations and raised full-year guidance on its last report back in May. Two things, in particular, excite me about Williams-Sonoma. First, the company is focusing on and growing online sales. And, two, you're not only bullish on the store Williams-Sonoma, but you're betting on other tony brands such as Pottery Barn and West Elm when you invest in WSM.

The stock pays a decent dividend, making it a good buy outright. Be careful because WSM options are thinly traded. That does not mean you cannot pick up a good price on around-the-money calls with expirations of September and out. Just be sure to hold firm to your price using limit orders.

According to Briefing.com, Willams-Sonoma reports earnings Thursday before the bell (date not confirmed).

ANN is not necessarily quite as high-end as names like Ralph Lauren, Nordstrom, Williams-Sonoma or even Saks, but you're certainly not slumming it if you shop at Ann Taylor. All three charts look pretty bad, but ANN's is most bullish, even if in an ugly way.

Like SKS, I would take a bit of a flyer on ANN. It's certainly not as reliable as the bigger and higher-end names. Plus, ANN has not necessarily been a consistent performer earnings-wise over the last several years. I would look to slightly out-of-the-money ANN January 2012 options where there is at least a bit of open interest. As with WSM, use limit orders and hold hard and fast to your price because these spreads can eat you alive if you do not drive a hard bargain.

Ann Taylor reports before the open on Friday.

In all three cases, the charts are ugly, but the broader market has been ugly as well. I am bullish on the industry, therefore I am comfortable making bullish bets on retailers from the ANN-level on up. There's no doubt you're going to lose some of those bests, but wins on solid earnings from Ralph Lauren and Nordstrom, for instance, will more than make up for any losses that come your way. I like to think of it as diversification within a broad sub-sector.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in SKS, ANN, WSM over the next 72 hours.

Source: Saks, Williams-Sonoma, Ann Taylor: Trading Earnings With Options