Buying CVNA put contracts.
Carvana Co. (CVNA) operates an e-commerce platform for buying and selling used cars. That business has been under significant pressure as used car inventories are simply non-existent.
Meanwhile, CVNA operates in a highly competitive industry and is not expected to generate profits for the foreseeable future. so with a $10.8 billion market capitalization, a money-losing enterprise, and a market that is punishing high-value growth stocks, shares are vulnerable to a sharp decline.
The stock had a modest rebound last month as tech stocks started to bounce. But the rebound was very weak compared to many other tech stocks — indicating a lack of enthusiasm with investors.
Today, we’ll buy put contracts to bet on a decline for this stock, and a possible break of previous lows near $98. This sets up a good reward-to-risk opportunity as these put contracts will certainly retain plenty of value even if CVNA holds up (because of the volatility in this market right now).
- Buy (to open) 3 CVNA May 20th $140 Puts
- Limit $28.00 or less
- The new position will represent roughly 8.6% of our Spec Model capital
- 14:47 Executed
- Bot 3 CVNA May 20th $140 Puts @ $27.40