Bulls get behind the wheel of $CVNA

Carvana (CVNA) option bulls got behind the wheel earlier this year, driving big gains.

Back on Feb. 27, Market Rebellion’s Unusual Activity Service identified the purchase of 4,700 January 2022 $130 calls for $19.16 to $20.80 as part of a bullish roll with shares at $91.00. This was clearly fresh buying, as open interest in the strike was just a mere 4 contracts before the activity appeared.

Those calls traded for $156.35 today, at least 7.5 times their purchase prices. The stock rose 202.02% in the same time frame, illustrating the kind of leverage that can be achieved with options.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

CVNA was up 4.64% at $278.60 at the close today, setting new highs this session. The online car marketplace was initiated with a Buy and $300 price target at KeyBanc this past Thursday and is estimated to next report earnings on Feb. 24.