Chewy, Inc. (CHWY) is getting a lot of attention in the news and in social media. It started back on May 29th when CHWY reported earnings and announced a $500 million stock buyback program. The announcements were received as very positive for the company. 

Then a few days ago, Keith Gill (aka Roaring Kitty) shared that he had significant holdings of CHWY stock. That quickly made CHWY start trading like a meme stock. The stock has since fallen back down from the high of $39.10 on the 27th of June, but investors are still talking about CHWY. is showing that mentions are up 404% in the last 24hrs. And that’s after the spike when Roaring Kitty shared his position.

This MDM graph compares the modeled expectations of current options prices (the orange line) to the actual movement of CHWY’s stock price over the past year. You can see that the actual behavior (the blue histogram) did NOT make big moves as often as the modeled options prices currently expect. This graph tells us the CHWY options expiring on Friday, July 5th are very expensive compared to the historical movement of CHWY’s actual stock price over the last year. 

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This Volatility Cone shows us that the volatility expectations (the yellow dots) are all extremely high compared to the average historical volatility of CHWY shares. To learn more about the Volatility Cone, click here. Most of the volatility expectations are even higher than the extreme high historical volatility. This graph confirms that volatility expectations and options prices are all relatively high on CHWY at every expiration.

This Volatility Term Structure is inverted. That means shorter-term options are more expensive than longer-term options. To learn more about Volatility Term Structure, click here. Options expiring Friday are extremely expensive and have the shortest amount of time till expiration. Because of the holiday, we can sell options for Friday’s expiration, and we will have 4 days of time decay while the market will only be open for 3 days. We will talk about time decay and the way it works in our favor when selling options in our ODDS Online Coaching session today at 2 pm ET.

CHWY volatility expectations and options prices are relatively high after meme stock mogul, Keith Gill, shared his position. We can sell expensive CHWY options for this Friday’s expiration in a limited-risk high-probability credit spread. 

To get the details on today’s trade, be sure to read today’s ODDS Online Daily Option Trade Idea.

To access Odds Online Daily and be able to see any stock you are tracking in this software, click here.

Thank you,

Don Fishback