Bulls are dominating the options pits
Schaeffer’s 2024 Top Pick Chewy Inc (NYSE:CHWY) is 13.5% higher to trade at $25.92 at last check, earlier as high as $27.08, and on track for its highest close of 2024. While the catalyst behind today’s bull gap remains unclear, CHWY earlier hit its highest levels since August 2023. The security has been on the rise since its late-May post-earnings bull gap, found support at the $22 level, and now sports 63.1% quarter-to-date lead
There’s still ample room for upgrades, with nine of the 24 analysts in coverage calling Chewy stock a “hold” or worse. Meanwhile, short sellers are showing themselves out, and a continued exodus could boost keep boosting shares. Short interest fell 21.3% in the last two reporting periods, but still accounts for 14.2% of the equity’s available float.
Options traders are chiming in, with 157,000 calls and 72,000 puts traded so far today, which is six times the volume typically seen at this point. Most active is the June 25 call, followed by the 22.50 put in the same monthly series, with new positions being opened at both.
The options pits were firmly bullish over the last two weeks, per the stock’s 10-day call/put volume ratio of 4.56 over at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 86% of annual readings.
These options traders are pricing in low volatility expectations. The equity’s Schaeffer’s Volatility Index (SVI) of 17% stands higher than just 18% of readings form the past 12 months.