BofA Global Research upgraded CHWY to “buy” from “underperform”
Chewy Inc (NYSE:CHWY) is up 4.9% at $34.54 at last glance, after a rare double-upgrade from BofA Global Research to “buy” from “underperform,” with a lofty price-target hike to $40 from $24. The firm noted that pet adoption is up since the beginning of the year, while pet spending has reached a low point and could be due for a rebound. Increased web traffic, among other things, was also a factor.
Today’s pop has CHWY inching above the $34 region, which capped rallies in mid September and earlier this month. Year to date, the equity is up 45.7%, with help from long-term support at the 120-day moving average since May.
Over in the options pits, though calls are winning out on an absolute basis with 9,575 across the tape so far today, the 3,766 puts exchanged represents double the put volume typically seen at this point. The weekly 11/22 34-strike call is the most popular, with new positions being sold to open.
Options traders have been much more bullish than usual over the past 10 weeks. CHWY’s 50-day call/put volume ratio of 5.55 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks higher than all other readings in its annual range.
These options are reasonably priced at the moment, too. Chewy stock’s Schaeffer’s Volatility Index (SVI) of 69% ranks in the 25th percentile of readings from the past 12 months, meaning options traders are pricing in low volatility expectations.