CHWY takes a bite out of the market

BY ANDREW GIOVINAZZI

December 22, 2023

Yo Pit Crazies,

Mark and Licia go hard tomorrow to teach the people about 0 DTE options. Learn how to use them the right way.

When ARK funds Tech and Innovation fund (Ticker: ARKK) can make a recovery, any stock can make a recovery. One of the most liked stocks was Chewy Inc (Ticker: CHWY) during the meme era. Everyone with a pet has a Chewy box on their front porch with goodies inside. On the strength of that, CHWY traded well over $100.00. Over the last few weeks it dipped down into the teen’s.

Heck, Mark and I sold $21/15 put spreads in the November cycle. CHWY dipped to $17 only to come roaring back to $25 Thursday. Even with the selloff on Wednesday, CHWY held up well and is outperforming for the last two weeks.

30 Day Chart in CHWY

Is there any run left in CHWY?

Let’s take a look

It was a bit early for CHWY to have a 50 billion dollar market cap

CHWY did get hit with the Amazon.com (Ticker: AMZN) stick much like Costco Inc (Ticker: COST) and Walmart Inc (Ticker: WMT) did several years ago when AMZN bought Whole Foods. It turns out that AMZN is good at a lot but muscling into other markets has not turned out to be the pot of gold that folks thought. WMT is up from $55 and COST from $150 I think CHWY will be the same way.

5 year chart of CHWY with 90 Day IV

CHWY option premiums are relatively low considering the stock is only $25. I have been doing 1 x 2 call spreads against the stock I got put and after that I will roll into calls with the gains. I think the stock will be $50 again by the end of 2024.

Trading 0 DTE takes technique, just like learning how a 1 x 2 call spread works, 0 DTE has unique entry and exit characteristics. Check out our class here.

To Your Trading Success,