Thanks to the uncertainties of the consumer economy, online pet products retailer Chewy (CHWY) would appear to be a risky bet. It’s already one of the top performers in the equities space, having gained over 18% since the start of the year. For context, the benchmark S&P 500 is down about 4% during the same period.

Nevertheless, the professional money doesn’t appear fazed about CHWY stock. On Friday, it stood as one of the highlights in Barchart’s screener for unusual stock options volume. Specifically, total options volume reached 46,998 contracts, representing a 193.41% lift over the trailing one-month average metric.

What’s more, call volume of 31,768 contracts greatly exceeded put volume of 15,230 contracts, yielding a put/call ratio of 0.48. Drilling into options flow data, which focuses exclusively on big block transactions likely placed by institutional investors, net trade sentiment reached $416,800, thus favoring the bulls.

Overall, gross bullish transactions measured $694,700 on Friday, while gross bearish transactions were $277,900 below parity. Notably, there appears to be robust sentiment for out-the-money call options, with strike prices ranging from $41 to $45.

To be sure, unusual options data, along with options flow, can only show so much. However, by logical deduction, a debit-based strategy requires CHWY stock to meet a certain outcome for profitability to materialize. Since traders aren’t in the business of losing money deliberately, one can reasonably presume that Chewy may still have some legs left.

Even better, the actual demand profile of CHWY stock suggests that traders who were late to the game can still potentially extract alpha here.

Striking While the Deck is Hot for CHWY Stock

At any given moment, the chances that a one-week long position will be profitable for CHWY stock is surprisingly low, around 49%. Usually, stable equities enjoy an upward bias. With Chewy, it suffers the challenge of having a negative bias.

Still, this bias stems from a distribution of all sentiment regimes. But the thing is, publicly traded securities often encounter an ebb and flow. Some sentiment cycles feature probabilities that can differ quite dramatically from the baseline of 49%.

In the past 10 weeks, CHWY stock printed a “7-3” sequence: seven weeks of upside mixed with three weeks of downside, with a net positive trajectory across the period. The significance of this sequence is that in the following week, there’s a 58.62% chance that the price action will be positive.

Should the bulls assume control, the median one-week return stands at 4.24%. Assuming that the optimists dictate terms, CHWY stock will likely take a crack at exceeding the $42 level within the next six weeks. Over a 10-week span, CHWY may level off at a median price of around $41.

If the bears take the wheel, there could be significant turbulence, with a downside target in mind of approximately $36. Ultimately, historical trends suggest that the median downside risk sits at around $38.

Another element that makes CHWY stock intriguing at this hour is the demand mechanism that typically drives its price discovery process. Chewy appears to be a stock where strength begets even more strength. For instance, the 8-2 sequence with positive net trajectory features similar odds of long-side success in the following week (57.14%).

In colloquial terms, the deck is hot for speculators. If you were thinking about gambling on Chewy anyways, this is your chance to do so with the odds in your favor.

To be clear, favorable odds don’t guarantee a profitable outcome. However, as a baseline, CHWY stock generally suffers from a negative bias. This is one of those rare moments where the bias is positive, thus incentivizing a higher-risk wager.

Going for the Quick Strike

For the impatient speculator looking for a quick strike, the 40/41 bull call spread expiring May 23 is awfully tempting. This transaction involves buying the $40 call and simultaneously selling the $41 call, for a net debit paid of $47. Should CHWY stock rise through the short strike price of $41 at expiration, the maximum reward is $53, a payout of almost 113%.

What makes this trade attractive is that, based on historical responses to the 7-3 sequence, CHWY stock should be able to exceed $41 within the next two weeks. However, market makers believe such a move is unlikely, given the probability of profit of only 39.7%. From a quantitative perspective, this debit call spread could be favorably mispriced, presenting a huge opportunity for data-focused traders.