Chewy Options Debut Quiet After Red-Hot IPO

CHWY options are trading today after the stock went public last week

by Karee Venema

Published on Jun 20, 2019 at 3:08 PM

It's been a red-hot year for initial public offerings (IPOs). While big names Beyond Meat (BYND) and Uber Technologies (UBER) have stolen most of the limelight, online pet supplies retailer Chewy Inc (NYSE:CHWY) made its trading debut last Friday, June 14, opening at $36 -- well above its IPO price of $22.

CHWY stock topped out at a record high of $41.34 on its first day of trading, before tagging an all-time low of $32.67 the following session. The shares were last seen down 1.1% today at $34.51, but are still comfortably north of their IPO price.

Meanwhile, Chewy's options began trading today, and initial volume is light on an absolute basis. Most recently, 599 calls have changed hands, compared to 573 puts. The July 30 put is most active, and it looks like new positions are being purchased here, while speculators may also be buying to open August 25 puts. If this is the case, put buyers expect CHWY to sell off over the next eight weeks.

On the call side, the July 40 strike is most active. The bulk of the activity here has occurred on the bid side, suggesting the calls are being sold to open. In this scenario, speculators will be able to pocket the credit collected should CHWY stock stay south of the round $40 mark through July expiration. Risk for the call sellers is theoretically unlimited on a sharp move to the upside from the underlying equity.

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