Bulls test drive gains with $CVNA

Carvana (CVNA) has yielded fast gains on bullish option positions today for nimble traders.

Yesterday on Sep. 28, Market Rebellion’s Unusual Activity Service identified the purchase of 2,800 Weekly $220 calls, expiring on Oct. 2. for $2.46 to $5.30 with shares at $216.46. This was clearly fresh buying, as open interest in the strike was just a mere 80 contracts before the activity appeared.

Those calls have traded for as much as $15.00 today, at least 3.5 times their average purchase price. The stock rose 7.46% in the same time frame, illustrating the kind of leverage that can be achieved quickly 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 last up 5.04% at $229.00 in afternoon trade. The online car marketplace’s shares’ price target was raised to $265 from $209 this morning at Piper Sandler.