Petco Options Traders Bet An Epic Short Squeeze Is In The Cards

Petco Health and Wellness Company, Inc. WOOF spiked higher on Monday afternoon. Earlier in the day, the company announced plans to present at the Evercore ISI Consumer & Retail Summit on Tuesday morning.

Traders and Investors may be betting the company has news to announce at the summit or Petco could be the target of a retail-fueled short squeeze. There were also rumors Reddit's WallStreetBets community may be eyeing Petco.

The stock has all the typical characteristics of other recent short squeeze targets such as Senseonics Holdings Inc. SENS and GameStop Corporation GME:

• Bizarre levels of ownership: Institutions and insiders own 130.95% of Petco’s float, with insiders owning 75.90% and institutions owning 55.05%.
• High short interest: As of May 28, 19.8 million, or 35.87% of the stock’s total 77.17 million float, is held short.

On Monday afternoon, Petco’s stock started squeezing and options traders piled in and purchased dozens of call contracts worth well over $1.07 million.

See Also: Stock wars: Petco Vs. Chewy

Why It’s Important: When a sweep order occurs, it indicates the trader wanted to get into a position quickly and is anticipating an imminent large move in stock price. A sweeper pays market price for the call option instead of placing a bid, which sweeps the order book of multiple exchanges to fill the order immediately.

These types of call option orders are usually made by institutions, and retail investors can find watching for sweepers useful because it indicates “smart money” has entered into a position.

The Petco Option Trades: Below is a look at the most notable options alerts, courtesy of Benzinga Pro:

• At 1:54 p.m., a trader executed a call sweep near the ask of 200 Petco Health and Wellness options with a strike price of $30 expiring on Sept. 17. The trade represented a $33,000 bullish bet for which the trader paid $1.65 per option contract.
• At 2:01 p.m., a trader executed a call sweep near the ask of 291 Petco Health and Wellness options with a strike price of $30 expiring on Sept. 17. The trade represented a $65,475 bullish bet for which the trader paid $2.25 per option contract.
• At 2:03 p.m., a trader executed a call sweep near the ask of 359 Petco Health and Wellness options with a strike price of $30 expiring on Dec. 17. The trade represented a $114,880 bullish bet for which the trader paid $3.20 per option contract.
• At 2:07 p.m., a trader executed a call sweep near the ask of 685 Petco Health and Wellness options with a strike price of $25 expiring on Sept. 17. The trade represented a $267,150 bullish bet for which the trader paid $3.90 per option contract.
• At 2:47 p.m., a trader executed a call sweep near the ask of 604 Petco Health and Wellness options with a strike price of $25 expiring on Sept. 17. The trade represented a $302,000 bullish bet for which the trader paid $5 per option contract.
• At 3:07 p.m., a trader executed a call sweep near the ask of 233 Petco Health and Wellness options with a strike price of $25 expiring on July 16. The trade represented a $92,734 bullish bet for which the trader paid $3.98 per option contract.
• At 3:12 p.m., a trader executed a call sweep near the ask of 463 Petco Health and Wellness options with a strike price of $25 expiring on June 18. The trade represented a $124,084 bullish bet for which the trader paid $2.68 per option contract.
• At 3:19 p.m., a trader executed a call sweep near the ask of 200 Petco Health and Wellness options with a strike price of $35 expiring on Dec. 17. The trade represented a $74,000 bullish bet for which the trader paid $3.70 per option contract.

WOOF Price Action: Shares of Petco were trading up 12% to $26.92 at publication time.