Trading Insights
Far OTM Puts Bought in CVNA Right Before Stock Gets Cut in Half
After a big earnings miss, CVNA isn’t doing so hot. Shares fell more than 37% overnight following a large bearish bet that we identified last week. As a result, shares are trading at $9 in line (to the penny) with the “smart money’s” prediction
Today, we’re talking about Carvana unusual options activity. Remember Carvana?
She’s not doing so well.
Last night Carvana reported its second top and bottom line earnings miss in a row. And this one was ugly.
Carvana reported a -35.37% miss on EPS (-$2.67 vs -$1.97 expected) and a -8.34% revenue miss ($3.39B vs $3.69B expected). As a result, shares of Carvana fell -37.28%, to $9.00 in intraday trading.
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If you read the title, you already know where we’re going with this.
Carvana Unusual Options Activity: $9 Strike Puts
You can’t make this stuff up. The week before last, someone dropped over a quarter-million dollars on far OTM $9 strike puts. These puts were set to expire worthless unless Carvana experienced a car-pocalypse. Of course, you’ve seen the graph above. You already know what happened. These puts, which expire November 18th, so the extrinsic value combined with Carvana’s high-speed plummet is leading the value of these bearish puts to rapidly accelerate in value.
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Did someone know something? Was it just solid research? We don’t care. We just care about the end result: That once again, someone with more money and resources than most of us has hit another timely market prediction literally to the penny. This is why we follow the smart money.