Sell $15 March 2027 Puts for 20.1% Yield on Chewy Stock
Chewy trades near $20 and investors can sell March 2027 $15 puts to collect about $187 premium per contract, yielding 15% annualized plus 5% money-market yield for a total 20.1% yield and a $13.13 effective cost basis if exercised. Chewy serves 21.3M customers with $12.6B in net sales.
1. Option Strategy Overview
At Chewy’s current $20 share price, investors can sell long-dated put options expiring March 19, 2027 with a $15 strike, collecting roughly $187 premium per contract. This generates a 15% annualized return on the $1,500 cash set aside plus 5% from money-market interest, totaling a 20.1% yield. If Chewy stays above $15, the full premium is kept; if shares fall below $15, the effective cost basis becomes $13.13 per share.
2. Company Fundamentals and Regulatory Overhang
Chewy supports 21.3 million active customers and posted $12.6 billion in recent net sales, driven by recurring Autoship sales and a growing veterinary care segment. Unsealed California antitrust filings allege third-party vendor collusion affecting online retailers, creating headline risk; the put-selling strategy’s roughly 33% discount cushion helps mitigate potential share price declines from regulatory uncertainty.