Carvana (CVNA) option traders got behind the wheel of bullish positions last week and are driving big profits this session.
On May. 2, Market Rebellion’s Unusual Option Activity Service found that 20,000 May $8 calls were bought for $0.51 to $0.73 as part of a complex bullish spread with shares at $6.75. This was clearly fresh buying, as open interest in the contract was just 286 before the activity appeared.
Those calls have traded for as much as $3.00 so far this session, a 310.96% return, while the stock gained 59.41% 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 21.76% at $10.91.
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