CHWY September 2026 Options Begin Trading

The article outlines two options strategies for Chewy Inc. (CHWY), currently trading at $41.77, offering yield enhancement and strategic entry/exit points. Selling a $37.50 strike put, 10% out-of-the-money, could result in an effective cost basis of $33.25 if assigned, or an 11.33% return (11.03% annualized) if it expires worthless (71% probability). Alternatively, a covered call using a $45.00 strike call, 8% out-of-the-money, could yield a 19.58% total return if shares are called away by September 2026, or an 11.85% premium boost (11.53% annualized) if the call expires worthless (44% probability). Implied volatilities for these options are 48% and 42% respectively, aligning with CHWY's 42% trailing twelve-month volatility.

Analysis

The options market for Chewy Inc. (CHWY), currently trading at $41.77, presents two distinct strategies for yield enhancement and strategic positioning. Selling the $37.50 strike put contract offers a way to potentially acquire shares at an effective cost basis of $33.25, a significant discount to the current market price. Alternatively, if the put expires worthless, which has a stated probability of 71%, the seller could realize an 11.33% return on the cash commitment (11.03% annualized). For existing shareholders, a covered call strategy using the $45.00 strike provides an opportunity to generate an 11.85% premium boost (11.53% annualized) if the option expires worthless, with a 44% probability. If CHWY's price rises above the strike, this strategy would lock in a total return of 19.58% by the September 2026 expiration, at the cost of capping further upside. The implied volatility for the put (48%) and call (42%) are noteworthy, particularly when compared to the stock's actual trailing twelve-month volatility of 42%, suggesting the put premium is slightly elevated relative to historical price movements.

Key Decisions for Investors

• Investors bullish on CHWY but seeking a lower entry point could sell the $37.50 strike put to either acquire shares at an effective cost of $33.25 or generate an 11.33% return on cash.
• Current CHWY shareholders could write the $45.00 strike covered call to generate income, but must accept a capped total return of 19.58% and the potential sale of their shares if the stock price appreciates significantly.
• Given the put option's implied volatility of 48% is elevated above the stock's 42% historical volatility, the premium received from selling puts appears more attractive than selling calls, where implied and historical volatilities are aligned.
• Monitor the stated probabilities of expiration for both options, as a decrease in the 71% chance of the put expiring worthless would signal an increased risk of assignment and a changing market outlook on CHWY.