Chewy (CHWY) Surges 5.7% on Intraday Rally: What’s Fueling the Momentum?

Summary
• CHWY trades at $38.28, up 5.7% from $36.21
• Intraday high hits $38.49, low dips to $36.67
• Turnover jumps to 3.2M shares, 1.67% of float

Chewy’s stock is surging on a sharp intraday rebound, driven by a mix of technical momentum and speculative positioning. With the stock trading near its 52-week high of $48.62, traders are weighing whether this rally marks a sustainable breakout or a short-lived bounce. The options market is heating up, with leveraged calls and puts seeing heavy volume as volatility spikes.

Short-Term Bullish Momentum Drives CHWY Higher
Chewy’s 5.7% intraday gain is fueled by a confluence of technical and speculative factors. The stock has broken above its 30-day moving average ($37.62) and is now trading near its 200-day average ($36.39), suggesting a shift in near-term sentiment. The MACD histogram turned positive, indicating bullish momentum, while RSI (43.33) remains in neutral territory, avoiding overbought conditions. Additionally, the Kline pattern highlights a short-term bullish trend, with the stock forming a bullish breakout above key resistance levels. Options data reinforces this, with heavy volume in out-of-the-money calls (e.g., CHWY20250822C38) suggesting aggressive bullish positioning.

Internet Retail Sector Mixed as Amazon Trails CHWY’s Surge
The Internet Retail sector is broadly mixed, with Amazon (AMZN) up 0.72% but lagging behind Chewy’s sharp move. While Amazon’s modest gain reflects broader e-commerce resilience, Chewy’s rally is more pronounced, driven by its unique position in the pet care niche. Sector peers like Etsy (ETSY) and DoorDash (DASH) are trading flat, indicating that CHWY’s move is stock-specific rather than sector-wide. This divergence suggests Chewy’s momentum is fueled by technical factors and speculative options activity rather than macroeconomic tailwinds.

Leveraged Calls and Key Levels to Watch in CHWY’s Bullish Setup
• 200-day average: $36.39 (below current price)
• RSI: 43.33 (neutral)
• MACD: -1.14 (positive histogram)
• Bollinger Bands: Upper $38.99, Middle $36.59

Chewy’s technicals point to a bullish continuation setup. The stock is trading near its upper Bollinger Band ($38.99) and above key moving averages, suggesting a potential test of the 52-week high. A break above $38.49 (intraday high) could trigger further gains, while a retest of the $36.67 low would validate the bullish trend. The options market is heavily skewed to the upside, with leveraged calls like CHWY20250822C38 and CHWY20250822C39 offering high-risk, high-reward potential.

Top Option 1: CHWY20250822C38
• Code: CHWY20250822C38
• Type: Call
• Strike Price: $38
• Expiration: 2025-08-22
• IV: 38.12% (moderate)
• Leverage Ratio: 31.50% (high)
• Delta: 0.59 (moderate)
• Theta: -0.1393 (high time decay)
• Gamma: 0.1602 (high sensitivity)
• Turnover: 288,844 (high liquidity)
This call offers a 275% price change potential if the stock continues upward. High gamma and moderate delta make it ideal for a short-term rally.

Top Option 2: CHWY20250822C39
• Code: CHWY20250822C39
• Type: Call
• Strike Price: $39
• Expiration: 2025-08-22
• IV: 39.07% (moderate)
• Leverage Ratio: 50.57% (very high)
• Delta: 0.43 (moderate)
• Theta: -0.1166 (high time decay)
• Gamma: 0.1580 (high sensitivity)
• Turnover: 66,920 (high liquidity)
This contract offers a 370% price change potential, with high leverage and gamma amplifying gains in a bullish scenario. Aggressive bulls should consider this for a breakout above $38.49.

Payoff Estimation: At a 5% upside (target $40.19), CHWY20250822C38 yields $2.19 per contract, while CHWY20250822C39 yields $1.19. Both contracts benefit from high gamma and moderate delta, making them ideal for a continuation of the current rally.

Backtest Chewy Stock Performance
The backtest of CHWY's performance following a 6% intraday increase shows poor results, with a strategy return of -29.87% and an excess return of -113.96%. The strategy underperformed significantly compared to the benchmark, which had a return of 84.10%. The Sharpe ratio was -0.11, indicating negative risk-adjusted returns, and the maximum drawdown was 0.00%, suggesting that the strategy faced no additional downside risk after the initial surge.

Bullish Momentum Intact: CHWY’s 52-Week High in Sight
Chewy’s intraday surge is underpinned by strong technical momentum and aggressive options positioning. The stock’s proximity to its 52-week high and key resistance levels suggests a potential breakout scenario. Traders should monitor the $38.49 intraday high as a critical threshold; a break above this could trigger a test of $48.62. Meanwhile, Amazon (AMZN) remains the sector leader, up 0.72%, but its muted performance highlights Chewy’s unique bullish setup. For investors, the key takeaway is to watch for a sustained move above $38.49 or a breakdown below $36.67 to determine the next directional bias. Aggressive bulls may consider CHWY20250822C39 into a confirmed breakout.