$CVNA bulls drive for profits

Carvana (CVNA) option traders got behind the wheel of bullish positions last month and are driving big profits this session.

On Jul. 19Market Rebellion’s Unusual Option Activity Service found that 5,000 Weekly $25 calls, expiring today, were bought for $1.35 to $1.49 as part of a bullish spread with shares at $20.78. This was clearly fresh buying, as open interest in the contract was just 145 before the activity appeared.

Those calls have traded for as much as $21.11 so far this session, at least 14 times their purchase prices. The stock gained 124.01% at the same time, a large move but nowhere near that of its options on a relative basis.

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 higher on the day by 33.01% at $44.57.

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