Affordable Pet Supplier for Options Bulls

The equity also boasts a more than 100% year-to-date lead

Nov 4, 2020 at 3:17 PM
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Pet supply e-tailer Chewy Inc (NYSE:CHWY) has performed particularly well on the charts as of late. From a technical perspective, the security sports a 112.4% year-to-date lead. And now, the stock is pulling back to its 50-day moving average, an area that has served as a constant source of support recently. In other words, now is the perfect time to buy calls.

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A short squeeze could create even more tailwinds for the security. Short interest rose 4.2% during the past two reporting periods, and the 12.77 million shares sold short make up a whopping 23.8% of the stock's available float. In simpler terms, it would take three days to buy back these bearish bets, at CHWY’s average pace of daily trading.

An unwinding of pessimism in the options pits could soon push the security higher, as well. This is per CHWY’s Schaeffer's put/call open interest ratio (SOIR) of 1.09, which stands higher 94% of readings from the past year. In other words, short-term option traders have rarely been more put-biased.

Lastly, now looks like an affordable time to take advantage of Chewy stock with options. This is per the equity’s Schaeffer's Volatility Index (SVI) of 68%, which sits higher than just 26% of all other annual readings.

Subscribers to Schaeffer's Weekend Trader options recommendation service received this CHWY commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

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