Five July 4th Fireworks: Unusual Options Activity Flags Cheap Lottery-Ticket Calls in CHWY, AVGO, PYPL, STLA and WMT

The markets are closed today, as America officially celebrates its 250th anniversary on Saturday. There will be lots of barbeques as friends and family gather to enjoy a very special moment in the country’s lengthy history. 

The Dow Jones Industrial Average closed up 1.1% on Thursday, hitting a record high of 52,900.27, its 20th record close in 2026, gaining 2% on the week. At the same time, the S&P 500, while flat, finished up 1.7% in four trading days, and the Nasdaq Composite, which fell 0.8%, gained 2.1% for the week. 

It’s a clear sign that while the stock market is humming, the job market and the economy aren’t, with the jobs report showing that the U.S. added just 57,000 jobs in June, about half of what economists expected.  

Where we go from here in the second half of 2026 is anyone’s guess. 

In yesterday’s unusual options activity, there were a significant number of calls expiring on July 10, a week from today. Of the calls, Investors were able to buy 45 at $0.20 or less. 

These five, while not home runs or slam dunks, are definitely better bets than the prediction markets. 

Have a safe and happy July 4 weekend. 

Chewy (CHWY)  

As stocks go, Chewy (CHWY) is not for me. It never has been, even though I’m a huge animal lover. A little over a year ago, I compared Chewy the Company vs. Chewy the Stock. 

“The reality is that Chewy is an unexceptional company in an industry that tends to favor scale, which it has, but that comes with low profitability, often sporadic at best,” I wrote on May 30, 2025. 

“In the 23 quarters it has reported earnings as a public company, it has generated an operating loss on 14 occasions (61%), including its most recent quarter, Q1 2025, when it lost $9.7 million from $3.25 billion in revenue.”

At the time, Chewy stock was valued at 52 times EBITDA (earnings before interest, taxes, depreciation and amortization). Today, the multiple is 16.7x, according to S&P Global Market Intelligence. 

That doesn’t mean it’s cheap. Cheaper, maybe, but still expensive given its inconsistent profitability. Chewy stock is down 54% since I wrote about it in May 2025, hitting a two-year low of $17.40 on June 22. It has since recovered slightly into the low 20s. 

Based on this bounce, I’m suggesting that aggressive investors consider Chewy’s July 10 $22.50 strike at the July 2 closing ask price of $0.16, which is less than 1% of the share price. With an expected move of $0.99 by next Friday, you’ve got a good chance to at least break even on what is a very inexpensive bet. 

Broadcom (AVGO)

Broadcom’s (AVGO) July 10 $435 strike price closed 20.68% OTM (out of the money). To break even, it has to gain a few pennies more than 20.68%. At the ask price of $0.10, your outlay is a minuscule 0.03%. For a $360 stock, it’s nothing. 

Of course, the profit probability of this bet is considerably less than that of the Chewy bet previously, at just 0.61%. That said, should a catalyst appear next week -- unlikely given earnings aren’t until Sept. 3 -- you could double your money by selling to close before Friday’s expiration if the share price increases by $14.49 (4.0%). The expected move is 4.7%, so it’s possible. 

Broadcom’s stock fell nearly 25% in the past month due to the company’s $16 billion AI chip forecast for the third quarter coming in slightly less than the analyst estimate. Long-term, it expects to generate $100 billion in annual revenue from AI chips. 

While competition is intense in this segment of the semiconductor market, in my limited experience following large-cap tech stocks, CEO Hock Tan is one of the best leaders in the industry. 

That makes AVGO stock a good long-term hold regardless of the near-term calls.     

PayPal (PYPL)

There is no question that PayPal (PYPL) has struggled to find its identity in recent years. As a result, its shares are down 85% from their all-time high of $310.16 in July 2021. In the span of five years, it has gone from growth stock to possible value stock. 

The biggest question investors continue to ponder about PayPal is whether it is a value play or a value trap. Analysts believe it’s a little of both. Of the 43 analysts covering PYPL, only 7 rate it a Buy (3.07 out of 5), with a $48.21 target price, less than 10% above yesterday’s closing price. The good news is that most of the analysts (31) rate it a Hold. They’re on the fence. 

Can the company push analysts from hold to buy? Not in the next week, it can’t. However, if you look at its cash from operating activities over the past 12 quarters, you’ll see that only twice was it below $1 billion--in Q2 2023 ($-200.0 million and Q2 2025 ($898.0 million)--which suggests it’s managed to maintain its cash flow generation despite a competitive landscape.  

Based on its trailing 12-month free cash flow of $6.39 billion as of March 31 and an enterprise value of $42.44 billion, it has a free cash flow yield of 15.1%. That’s close to the highest it’s ever been. I consider anything above 8% to be in value territory. Even this yield isn’t enough to get investors to bite. 

PayPal paid its first quarterly dividend of $0.14 in December 2025. The annual rate of $0.56 yields 1.2%, 15 basis points higher than the average S&P 500 stock. Add in the company’s share repurchases, and the total yield, according to Morningstar, jumps up to 15.72%, about five times the five-year average. 

The ask price of $0.16 is just 0.35% of PayPal’s closing price from yesterday. The probability of profit is 11.79%, slightly less than Chewy’s but still possible. 

Stellantis (STLA)

Stellantis (STLA) appointed rising star Antonio Filosa as its CEO a year ago in May. He’s spent the last year working to right the ship. This past May, Filosa released Stellantis’s $70 turnaround plan. Investors yawned. Its stock’s lost 25% since the May 21 announcement. 

As a long-time Jeep owner, I feel the previous CEO, Carlos Tavares, made a lot of dumb moves in the pursuit of profits. One of them, which I’ll never understand, was to discontinue the Jeep Cherokee, a major revenue driver. If my wife and I had wanted to buy a new vehicle in the last two years, the Grand Cherokee was too big, and there was nothing we’d have been interested in below it. Fortunately for Jeep, we’ve hung on to our 2020 model and are considering a hybrid Cherokee. But I digress.  

Filosa trained under Sergio Marchionne, the Canadian accountant who saved Fiat and Chrysler, but sadly died way too young. If anyone can pull off a revival, it’s someone who learned under the best. 

On Wednesday, Stellantis reported reasonably good U.S. sales numbers for the first half of 2026. Overall, they were up 5% through June, with the RAM brand contributing 37% of sales year-to-date, up 15% from a year ago. 

It’s still got work to do, but it’s gaining traction.

Of the five unusually active calls, Stellantis may be the best bet. 

Not only is the profit probability the highest at 26.23%, but you can double your money by selling to close before next Friday if STLA stock gains $0.31 (5.3%). The expected move is 5.4%. 

Walmart (WMT)

Walmart’s (WMT) stock lost nearly 4% on Wednesday after Cleveland Research issued a report that suggested the retailer’s same-store sales growth is slowing, arguing that if not for lower prices, sales wouldn’t be nearly as robust. If this keeps up, analysts will have to revise both sales and earnings estimates lower. 

That calls Walmart’s valuation into question. Its shares currently trade at 37.5 times its forward EPS estimate, slightly lower than the multiple earlier in the year but still among the highest in the past decade. 

One can make the argument that investors are willing to and should pay up significantly for a business that can withstand most economic headwinds and cycles. If you’re cautious, as I am, because of its valuation, calls make complete sense here. 

In the example from yesterday’s close, you can gain exposure to 100 shares of Walmart for $16 or 0.14% of its share price. For the same price, based on the Chewy example earlier, you’d pay 5.5 times as much for 100 shares of Chewy stock on a relative basis. 

Now, Chewy stock is much more volatile, so the share price movements over a single week are much greater, but if you’re concerned about what you pay for calls, WMT provides better value for a Hail Mary-type bet.