🐻 CVNA Bear Put Ladder - $45M Institutional Protection Play!

📅 October 17, 2025 | 🔥 Unusual Activity Detected

🎯 The Quick Take

Someone just deployed a $45M bear put ladder on Carvana at 12:17:57 PM today! This sophisticated institutional play bought 21,000 puts across five strikes ($250-$290) expiring January 16, 2026 - positioning for downside in the next 90 days. With Q3 earnings on October 29 and Amazon-Hertz competition heating up, this is major bearish positioning ahead of catalysts. Translation: Smart money is hedging or betting against CVNA after a 70% YTD run!

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📊 Company Overview

Carvana Co. (CVNA) is an e-commerce platform for buying and selling used cars with:
- Market Cap: $47.6 Billion
- Industry: Retail - Auto Dealers & Gasoline Stations
- Employees: 17,400
- Primary Business: Online used car sales, wholesale vehicle sales, financing, vehicle service contracts, and auto insurance

The company derives revenue from retail vehicle sales, wholesale operations, and ancillary services including financing, VSCs, and GAP waiver coverage.

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💰 The Option Flow Breakdown

The Tape (October 17, 2025 @ 12:17:57):

Time	Symbol	Side	Buy/Sell	Type	Expiration	Premium	Strike	Volume	OI	Size	Spot	Option Price
12:17:57	CVNA	MID	BUY	PUT	2026-01-16	$12M	$290	4.2K	4.7K	4,200	$334	$27.53
12:17:57	CVNA	MID	BUY	PUT	2026-01-16	$6.5M	$250	4.2K	10K	4,200	$334	$15.53
12:17:57	CVNA	MID	BUY	PUT	2026-01-16	$10M	$280	4.3K	2.1K	4,200	$334	$24.18
12:17:57	CVNA	MID	BUY	PUT	2026-01-16	$8.8M	$270	4.2K	287	4,200	$334	$21.03
12:17:57	CVNA	MID	BUY	PUT	2026-01-16	$7.7M	$260	4.2K	597	4,200	$334	$18.43

Total Premium Deployed: $45M across 21,000 contracts = 2.1 million shares of downside exposure

🤓 What This Actually Means

This is a bear put ladder - a sophisticated downside play that spreads risk across multiple strikes! The trader:

• Bought five different put strikes from $250-$290 (13-25% below current price)
• Spent $45M in total premium to control 2.1M shares of downside
• Heaviest positioning at $290 strike ($12M) - expecting at least 13% decline
• Synchronized execution at exact same time with identical 4,200 contract sizes
• January 16, 2026 expiration captures Q3 earnings (Oct 29), Q4 earnings (likely Feb), and holiday season results

Unusual Score: HIGH - This $45M deployment represents hedge fund sized positioning. The synchronized execution across all five strikes signals institutional order, not retail flow. This level of premium ($12M at highest strike) happens only a few times per year for CVNA.

Breakeven Analysis:
- $290 puts break even at $262.47 (21.4% drop needed)
- $280 puts break even at $255.82 (23.4% drop needed)
- Lower strikes have higher breakevens but offer lottery ticket payoffs

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📈 Technical Setup / Chart Analysis

YTD Performance Chart

Carvana has had an incredible turnaround year with +63.2% YTD performance, recovering from its near-bankruptcy lows. But the chart tells a tale of two halves - after hitting the April peak around $393, CVNA has given back gains and now trades around $325.

Key observations:
- Extreme volatility: 74.6% volatility signals massive moves expected
- Recent weakness: Down from April highs, facing technical resistance
- YTD range: $199.56 - $393.00 (currently in middle of range)
- Max drawdown: -43% from peak shows downside risk is real
- Volume spikes: Heavy distribution days visible in October

Gamma-Based Support & Resistance Analysis

Current Price: $325.48

The gamma chart reveals critical battlefield lines that explain this massive bearish bet:

Put Gamma Support (Blue bars below price):
- $325 level: Strongest immediate support with 1.96 put GEX and only 0.08 call GEX (net -1.88)
- $320 level: Major support floor with 2.94 put GEX creating strong buying pressure
- $310 level: Secondary support at 1.88 put GEX
- $300 level: Critical psychological level with 2.89 put GEX

Call Gamma Resistance (Red bars above price):
- $330 level: Immediate resistance with massive 5.80 total GEX (strongest level on chart)
- $340 level: Secondary ceiling with balanced gamma (0.86 call vs 0.92 put)
- $350 level: Major resistance zone transitioning to call-dominated territory
- $360-$380 levels: Light resistance but marks the "pain zone" for this put ladder

Net GEX Bias: BEARISH - Total put GEX (27.78) significantly exceeds call GEX (18.90)

Why This Matters for the Trade:
The put ladder strikes ($250-$290) are positioned below all major gamma support levels. If price breaks the $325 floor, there's a gamma vacuum down to $310, then another gap to $300. This structure could accelerate downside moves - exactly what the put buyer wants! Market makers will need to sell as price falls, amplifying the move.

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⚡ Catalysts

Upcoming Events

Q3 2025 Earnings - October 29, 2025 (After Market Close)
- Analyst consensus: EPS of $1.25-$1.30 (up 97% YoY) with revenue of $5.08B (up 38.9% YoY) (Source: MarketBeat)
- William Blair raised Q3 EPS estimate to $1.44, maintaining "Outperform" rating
- Company guided full-year 2025 adjusted EBITDA of $2.0-2.2B (Source: Investing.com Q2 Transcript)
- Earnings ESP of +7.29% suggests potential for upside surprise
- Risk: Any earnings miss or weak guidance could trigger the downside this trade is positioned for

Amazon-Hertz Competitive Threat
- Amazon partnered with Hertz in August 2025 to sell certified pre-owned vehicles through Amazon Autos
- Initial rollout in Dallas, Houston, Los Angeles, and Seattle - direct competition to Carvana's model
- This news triggered 4.2% decline in CVNA shares in August
- Hertz previously partnered with Carvana in 2021 - potential inventory redirect concerns
- Risk: Amazon's massive distribution network and customer base represents existential competitive threat

CEO Insider Selling Activity
- CEO Ernest Garcia III has been actively selling under Rule 10b5-1 trading plan adopted December 2024
- October 9: $1.02M in shares sold at $348-$362
- October 8: $3.6M in shares sold at $362-$370
- October 2: 10,000 shares sold at $393.76
- Risk: While pre-planned, the timing and magnitude of insider selling raises red flags

Valuation Concerns
- Trading at P/E ratio of 85-107 with forward P/E of 63.99
- Forward P/E is 3x the industry average of 20.99 - leaving little room for error
- Analysts note "valuation leaves no room for error" despite solid execution
- Risk: Any deceleration in growth could trigger multiple compression

Recently Completed

Q2 2025 Earnings Beat (July 30, 2025)
- Revenue of $4.84B (up 42% YoY) with EPS of $1.28 vs $1.09 estimate (Source: Investing.com)
- Sold 143,280 retail units (41% YoY growth) with record 12.4% adjusted EBITDA margin
- Net income of $308M (6.4% margin) with gross profit per unit of $7,344
- Strong execution across all metrics

Debt Restructuring Success (2023)
- Restructured approximately $5.2B in debt, reducing annual interest by $430M
- Debt-to-EBITDA improved to 2.1-4.2x (down from 18.8x in 2023)
- Moody's upgraded rating to B3 with positive outlook

Same-Day Delivery Expansion
- Rolled out same-day delivery in 15+ states including Chicago, Denver, Salt Lake City, Seattle
- Transaction times reduced to under 24 hours - creating competitive moat

AI Integration "Sebastian"
- Deployed AI-powered customer service on Azure AI Foundry
- 45% reduction in inbound calls per sale - significant cost savings

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🎯 Price Targets & Probabilities

Using the gamma levels, catalyst analysis, and current technical setup:

🚀 Bull Case (20% chance)

Target: $350-$380

• Q3 earnings significantly beat with strong guidance
• Amazon-Hertz partnership proves non-threatening
• Holiday season demand exceeds expectations
• Same-day delivery expansion drives market share gains

Why this hurts the put trade:
- $290 puts expire worthless (100% loss of $12M premium)
- All strikes OTM = total $45M loss
- Would need rapid reversal post-earnings

Gamma dynamics: Breaking above $330 resistance triggers positive gamma flip where MMs buy into strength

😐 Base Case (35% chance)

Target: $300-$330 range

• Mixed earnings with in-line results
• Stock trades sideways through year-end
• Competitive pressures balanced by execution
• Multiple compression but no collapse

Put trade outcome:
- $290 puts gain modest value if below $310
- Lower strikes remain OTM or minimal value
- Partial loss on premium paid

Gamma dynamics: Price oscillates between $300 support and $330 resistance with high churn

😰 Bear Case (45% chance)

Target: $250-$290

• Earnings disappoint or guidance cuts materialize
• Amazon competition intensifies with market share loss
• Macro headwinds (interest rates, consumer spending weakness)
• High debt load ($5.1B with 239.4% debt-to-equity) creates fragility
• Technical breakdown below $325 support
• CEO insider selling signals topping action

Put trade outcome:
- $290 puts highly profitable if stock reaches $250-$270 range
- 4,200 contracts at $290 strike worth $40+ each if stock at $250 (profit: $5M+)
- Full ladder profits across all strikes
- This is the scenario the $45M bet is designed for

Gamma dynamics: Breaking $325 support triggers gamma vacuum to $310, then $300 - accelerating downside

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💡 Trading Ideas

🛡️ Conservative: Follow the Smart Money (Small Scale)

Play: Buy 1-2 contracts of the $290 January puts

Cost: ~$2,753 per contract (current premium)
Max Risk: Premium paid ($2,753-$5,506)
Profit Potential: Meaningful if CVNA drops below $262 by January

Why this works: Piggybacks on institutional positioning at the highest conviction strike. 90-day window captures both Q3 and Q4 earnings. Break-even at $262.47 (21.4% decline) aligns with major gamma support zone.

⚖️ Balanced: Bearish Put Spread

Play: Buy $290 puts, sell $270 puts (January expiration)

Net Cost: ~$6.50 per spread ($650 per spread)
Max Risk: $650 per spread
Max Profit: $1,350 per spread (if CVNA below $270)

Why this works: Reduces cost basis while maintaining exposure to the $270-$290 zone where the institutional trader has heaviest positioning. Risk-reward of ~2:1. Profits if Amazon competition or earnings disappoint.

🚀 Aggressive: Counter-Trade the Puts (Contrarian Play)

Play: Sell cash-secured $280 puts (November expiration)

Premium Collected: ~$15-$20 per contract ($1,500-$2,000)
Risk: Assigned at $280 (willing to own CVNA at effective cost of $260-$265)
Reward: Keep premium if CVNA stays above $280

Why this works: If you believe the put buyer is wrong and CVNA holds up through earnings, collect inflated premium from elevated IV. Effective entry price of $260-$265 is attractive if you're long-term bullish on the turnaround story. Analysts have $432 average price target with 27.7% earnings CAGR projected.

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⚠️ Risk Factors

Premium Valuation Risk
- Forward P/E of 63.99 is 3x industry average - leaves zero margin for error
- Stock already up 63% YTD - significant gains already captured
- Multiple analysts cite "valuation stretched" despite solid fundamentals

Competitive Existential Threat
- Amazon-Hertz partnership represents far larger competitor with massive advantages
- Amazon's 200M+ Prime members vs Carvana's standalone platform
- Potential for Hertz to redirect inventory away from Carvana

High Debt Load Fragility
- Still carrying $5.1B in debt with 239.4% debt-to-equity ratio
- Interest coverage of only 2.6x - limited cushion if performance deteriorates
- Rising rates increase refinancing risk

Insider Selling Signal
- CEO selling $5M+ in October across multiple transactions
- While pre-planned (10b5-1), timing near highs is concerning
- Management has better information than market participants

Earnings Binary Risk
- October 29 is major catalyst - could move stock 15-25% either direction
- High expectations (97% YoY EPS growth) difficult to exceed
- Any guidance cut would be severely punished given valuation

Gamma Acceleration Risk
- If $325 support breaks, gamma vacuum to $300 accelerates decline
- Put GEX dominance means MMs sell into weakness
- Could trigger cascade effect this trade is positioned for

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🏁 The Bottom Line

Real talk: This $45M bear put ladder represents sophisticated institutional positioning ahead of significant catalysts. The timing is notable - 12 days before Q3 earnings, with the stock down 17% from April highs, and CEO insider selling accelerating.

The trader's thesis is clear: Carvana has run too far, too fast. At 63x forward P/E after a 63% YTD run, any stumble gets punished. The Amazon-Hertz partnership represents a credible existential threat. The gamma structure supports accelerating downside below $325.

If you own CVNA: Consider trimming positions or hedging with puts. The risk-reward has shifted after the massive YTD run. Smart money is clearly hedging here.

If you're watching: October 29 earnings is the inflection point. A miss or weak guidance could trigger the 20-30% decline this trade is positioned for. The $45M deployed suggests the trader has conviction and information edge.

If you're bullish: Wait for post-earnings clarity or look for entry points below $300 where valuation becomes more reasonable. The turnaround story is real (27.7% projected earnings CAGR), but timing matters.

Mark your calendar:
- October 29, 2025 - Q3 earnings (after close) - This is THE catalyst
- January 16, 2026 - Put expiration - Final settlement date
- Watch for any Amazon Autos expansion announcements

The $45M question: Is this smart hedging or a devastating directional bet? We'll know in 12 days.

Disclaimer: Options trading involves substantial risk of loss. This analysis is for educational purposes only and not financial advice. The bearish positioning described represents one institutional view and may not reflect actual market outcomes. Do your own research and consider your risk tolerance before trading.

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About Carvana: Carvana is an e-commerce platform for buying and selling used cars with a $47.6B market cap in the retail auto dealers sector. The company operates the largest online used car marketplace in the U.S., capturing approximately 1.5% market share with ambitious expansion targets.