Interesting CHWY Put And Call Options For June 2026

The article discusses potential options strategies for Chewy Inc. (CHWY) involving selling a $40 put contract and a covered call strategy using the $47.50 call contract, highlighting the potential returns and risks. Selling the $40 put offers a potential 11.37% return if the contract expires worthless, while the covered call at $47.50 could yield a 25.35% return if the stock is called away, but also carries the risk of missing further upside; the odds of the call expiring worthless are currently estimated at 47%, offering a 13.11% yield boost.

Analysis

The article outlines two specific options strategies for Chewy Inc. (CHWY), which was trading at $42.32 per share, targeting investors with different objectives. For those aiming to acquire CHWY shares at a lower effective cost, selling the $40.00 strike put contract, with a bid of $4.55, could result in an effective purchase price of $35.45 if assigned. This $40.00 strike is approximately 5% out-of-the-money, and current analytics suggest a 67% probability of this put expiring worthless, in which case the seller would realize an 11.37% return on their cash commitment, or an 11.31% annualized YieldBoost. Alternatively, for investors holding or acquiring CHWY shares, a covered call strategy involving selling the $47.50 strike call contract (approximately 12% out-of-the-money) for a $5.55 premium is detailed. This strategy could yield a 25.35% total return if the stock is called away at the June 2026 expiration. If this call contract expires worthless, an event with a 47% estimated probability, it would provide a 13.11% premium boost, or a 13.04% annualized YieldBoost, though this approach inherently limits upside potential should CHWY's share price surge significantly above $47.50. The implied volatilities for these options (49% for the put, 48% for the call) are noted to be slightly higher than Chewy's actual trailing twelve-month volatility of 47%, indicating that option premiums may reflect a mildly elevated expectation of future price swings or a typical risk premium, which can be beneficial for option sellers.

Key Decisions for Investors

• Investors interested in acquiring Chewy (CHWY) shares below the current $42.32 price could evaluate selling the $40.00 strike put, which offers a potential effective acquisition cost of $35.45 or an 11.37% return on cash if the option expires worthless, given the 67% probability for such an outcome.
• Current CHWY shareholders, or those purchasing shares at market price, might consider the covered call strategy using the $47.50 strike (expiring June 2026) to potentially generate a 25.35% total return if called away, or achieve a 13.11% annualized yield boost if the call expires worthless, whilst acknowledging the capped upside and the 47% probability of the option expiring out-of-the-money.
• Given that the implied volatilities for CHWY options (48-49%) are marginally above the historical volatility (47%), current market conditions may present relatively favorable pricing for option sellers; however, any options strategy should be carefully aligned with individual risk tolerance and a thorough assessment of Chewy's business fundamentals and market outlook.