Guys, I believe there is a huge opportunity coming that’s going to allow us to make a quick profit with very little risk
And if for some reason it goes against us initially no problem. We will just roll to the next month and profit!
In today’s video I am going to show you step by step how to make a quick profit with an earnings option trade in CHWY!
I answer the questions:
- Is now the right time for an option trade in CHWY?
- Is CHWY a good company poised to skyrocket or drop?
- How do we sell a put option in CHWY on the option trading platform?
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Hey guys, Darren here. We have a video for you here today.
But first, if you appreciate the time and effort that goes into doing the research and making these videos all I ask is one thing. Please do me a favor and hit the like and subscribe buttons real quick to help get this video out to more people. I really appreciate it and it helps ou the channel tremendously. So thank you very much.
I think it’s important that we understand all the different strategies and ways that the rich are getting richer. So that we can have the tools to do the same and do better for ourselves in any market while doing it safely.
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Be sure to download the FREE options Workshop in the link below.
It talks about the two main benefits of trading options over buying stocks.
DISCLAIMER, I am not a financial planner and I am not recommending trades. Please do your own research and if you are new or learning options, I recommend you start small.
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Is now the right time for an option trade in CHWY?
Guys, everyone loves their pets right?
They don’t talk back, they are always happy to see you, they love to play and they just love you no matter what………
Chewy is a pure e-commerce business that provides pet food and treats, pet supplies and pet medications, and other pet-health products, as well as pet services for dogs, cats, fish, birds, small pets, horses, and reptiles through its retail Website www.chewy.com, as well as mobile applications. The company offers approximately 110,000 products from 3,500 partner brands.
Guys let’s take a look at CHWY right now.
If we look at the 5 year chart on Tradingview it’s not too pretty!
It was up at $118 back in 2021 during the pandemic when brick and mortar stores were closed and people were forced to order online.
CHWY is now trading at just $18 today.
Looking at CHWYs income statement we see that Revenue has been consistently growing year over year for the past several years.
And the Balance sheet is clean too with Assets increasing while keeping liabilities in check as well.
So in wanting to place an earnings option trade in CHWY, it would be good to know if the stock is going to move up or down after earnings is announced on Wed December 6th after the close, right?
In other words,
Is CHWY a good company poised to skyrocket or not?
Rick Munarriz covered CHWY in an article just a few days ago that talked about why CHWY is currently down.
First he indicated that
Then he jumped to why it was down.
I believe so as well. So he is bullish on CHWY.
Here is another viewpoint from James Brumley.
So James is very bullish as well.
Lastly,
Brett Schafer also commented on CHWY and whether it is a buy or sell stock right now.
Brett pointed out…….
For me, there are 4 huge reasons why I am bullish on CHWY right now.
- It is a growth stock and inflation is starting to finally level off. So growth stocks should start to take off.
- It’s business model. Although Petsmart, Walmart, Kroger and Costco are major Brick and mortar suppliers, CHWY more people are willing to buy online and it is growing.
- They have an autoship platform that works like a subscription service so customers can place monthly orders. This is a huge part of their business that is growing and almost guarantees future revenue.
- Lastly, the price is at lows so with its current price it cant go much lower as it definitely isn’t going out of business. If for some reason it goes against us we just roll to the next month.
So now we know that I am going to place a bullish option trade in CHWY.
So,
How do we sell a put option in CHWY on the option trading platform?
We are using the Tastytrade option trading platform. You can do this on any option trading platform.
However, Tastytrade is one of the best and most intuitive for trading options.
These are the guys that developed the TOS Think or Swim Option trading platform and then sold it to TD Ameritrade. TD and Schwab use that platform still to this day.
Tastytrade is even better.
Use the link below and you can get cash back when you open an account. You can open an account with any amount. However, I do recommend that you open with around five thousand dollars so that you can place several different trades.
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Punch in CHWY in the upper left while on the trade page and the option chains will pop up.
We see that CHWY is currently trading at $18 and the IVR Implied Volatility Rating is a huge 102. This means that the option prices are high and it is due to the fact that it is just prior to the earnings release this Wed. Volatility is high because the price is more likely to make a larger move than typical.
After earnings volatility will drop so we want to sell options in the current high volatility environment. And then hopefully buy them back for less $’s after the earnings event.
Let’s click and open the Dec 15th chain since it is the regular monthly option chain and just 12 DTE Days to Expiration.
I am very bullish so I am going to try and collect quite a bit of premium. Let’s click on the Bid to SELL the 18 Put option. We collect $1.52 for selling this option which is really $152 since 1 option contract controls 100 shares of stock.
Now if we click on the Curve mode while still on the trade page we can visually see the profit zone in Green.
As long as we stay above the $18 strike price we keep the full $152 that is placed in our account as soon as we hit review and send to place the trade.
The breakeven is the $18 strike price – $1.52 collected which is $16.48. So the stock can actually move down and we still make money.
Hey what if we want to make more money than just $152 on this trade?
No problem….
If you want to go bigger, just increase the number of contracts that you sell. If you sell 2 contracts you collect $152 x 2 or $304.
I think I’ll do that….
Now what if the stock drops due to missing earnings, bad guidance going forward or something else?
No problem, just roll to the next month.
If this does happen, keep an eye out for the next video as I will show exactly how to roll the options to the next month and collect additional premium while waiting for the stock to come back.
Last thing guys……..wait to place this trade just before the close on Wednesday Dec 6th just prior to the close. That way you will be able to make sure that you are in the best position with your Puts and Chewy announces their earnings right after the close on that day.
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Alright guys, if you are a beginner and this sounded confusing do not worry. It did for me as well originally. We will be continuing to cover the details in future videos. We will continue to learn and succeed together.
I’ve put a link down below for the FREE Options Workshop. Be sure to grab that.
Remember to hit like and subscribe and leave a comment below with any questions and I’ll be sure to respond. Let me know what you are trading today and having success with.
Thanks for watching please share this video with a friend and see you in the next one!