CVNA Long-Term Bull Bet - $27M LEAP Play Ahead of Earnings!
$27M in unusual options flow detected on CVNA. Someone just dropped **$27M on long-dated Carvana...
🚗 CVNA Long-Term Bull Bet - $27M LEAP Play Ahead of Earnings! 💰
📅 October 21, 2025 | 🔥 Unusual Activity Detected
🎯 The Quick Take
Someone just dropped $27M on long-dated Carvana calls expiring January 2028! This massive 2,000-contract position at $350-$360 strikes signals institutional conviction in the used car dealer's multi-year growth story. With Q3 earnings hitting October 29th (just 8 days away), this is a big vote of confidence from smart money. Translation: Someone's betting CVNA's explosive growth continues for years!
📊 Company Overview
Carvana Co. (CVNA) is the second-largest used car dealer in the United States and leading e-commerce platform for buying and selling pre-owned vehicles: - Market Cap: $46.6 Billion - Industry: Retail-Auto Dealers & Gasoline Stations - Primary Business: E-commerce platform for buying and selling used cars, with revenue from vehicle sales, financing, and ancillary services
Carvana has revolutionized automotive retail since its 2013 launch by offering a fully digital, direct-to-consumer experience with iconic vending machine locations (39 locations), 7-day returns, and nationwide delivery. The company operates a vertically integrated model controlling the entire customer journey: sourcing, reconditioning, logistics, and financing through Bridgecrest Acceptance.
📊 The Option Flow Breakdown
The Tape (October 21, 2025 @ 09:48:42):
| Time | Symbol | Side | Buy/Sell | Type | Expiration | Premium | Strike | Volume | OI | Size | Spot | Option Price |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 09:48:42 | CVNA | ASK | BUY | CALL | 2028-01-21 | $14M | $350 | 1K | 1K | 1,000 | $348.41 | $135.5 |
| 09:48:42 | CVNA | MID | BUY | CALL | 2028-01-21 | $13M | $360 | 1K | 0 | 1,000 | $348.41 | $131.5 |
Total Investment: $27M across 2,000 contracts ($14M + $13M)
What This Actually Means
This is a pure long-dated bullish play - no spread, no hedge! The trader:
- Bought deep-in-the-money and near-the-money LEAP calls expiring January 2028 (2.25 years out)
- Paid massive premium ($14M for $350 calls, $13M for $360 calls)
- Benefits from high delta exposure (acting like stock ownership) with time for thesis to play out
- Breakeven at expiration: $485.50 on the $350s, $491.50 on the $360s
Size Context: 🏢 This is the size of a small hedge fund position - institutional money making a serious bet
The long-dated nature (2+ years) suggests the buyer expects CVNA to reach their ambitious 3 million annual unit target well ahead of schedule.
📈 Technical Setup / Chart Analysis
YTD Performance Chart
Carvana has been on an absolute tear in 2025! The stock is up +78.1% YTD, climbing from $199.56 at year-start to current levels around $355.49.
Key observations: - Sustained uptrend: Clean breakout from $160-$180 lows in March - Volatility spike: Max drawdown of -43% shows this isn't smooth sailing - Volume patterns: Increasing institutional interest with recent spikes - Momentum strength: Trading near YTD highs despite recent pullback
The chart shows a stock in a confirmed uptrend with strong momentum - perfect setup for this long-term call strategy.
Gamma-Based Support & Resistance Analysis
Current Price: $355.89
The gamma landscape reveals critical price zones that will influence near-term trading:
Call Gamma Resistance (Orange Bars Above): - $360: Moderate resistance with 1.01M call gamma - this is one of the trade strikes! - $370: Light resistance at 0.93M gamma - $380: Heavy wall at 1.64M call gamma (strongest nearby resistance) - $390-$400: Additional resistance layers building above
Put Gamma Support (Blue Bars Below): - $350: Strongest support level with 0.82M put gamma AND 3.11M call gamma (net bullish) - $340: Secondary support at 0.81M put gamma - $330: Moderate floor at 1.15M put gamma - $310-$300: Deep support zones if broader market corrects
Net Gamma Bias: BULLISH (26.96M total call gamma vs 15.92M put gamma)
The gamma setup perfectly explains the trade strikes - the $350 level is the strongest nearby support with massive call gamma, while $360 is the first resistance level. The trader expects CVNA to break through these levels and trade significantly higher over the 2-year timeframe.
⚡ Catalysts
Upcoming Events
Q3 2025 Earnings - October 29, 2025 - IMMEDIATE CATALYST (8 days away!) - Report due after market close with conference call at 5:30 PM ET - Wall Street expects EPS of $1.29-$1.44 (up from $0.64 in Q3 2024) - MarketBeat Analysis - Revenue target: $5.09 billion (range: $4.75B-$5.46B, representing ~39% YoY growth) - TipRanks Forecast - Full-year 2025 EPS estimate: $5.15 (223.9% increase YoY) - Full-year 2025 Revenue: $18.94 billion (38.5% growth) - JPMorgan just raised price target to $490 from $425 (44.97% upside), placed on "Positive Catalyst Watch" - Consensus price target: $419.94 with 14 Buy ratings, 6 Hold ratings, 1 Strong Buy
Long-Term Growth Target: 3 Million Annual Units - Management targeting 3M vehicles annually within 5-10 years from current ~520K expected in 2025 - Would represent ~7% market share of 38.6M annual U.S. used car sales - Path requires sustained 25-35% annual growth rates - Every incremental unit generates ~$5,000 in EBITDA due to operating leverage - 2024: ~390,000 units (33% growth) - 2025E: ~520,000 units (25% growth expected)
Profitability Expansion Ahead - 2025 Adjusted EBITDA guidance: $2.0-$2.2 billion (up from ~$800M in 2024) - 2026 estimates: $2.975 billion EBITDA - Q2 2025 achieved 12.4% EBITDA margin (highest in company history) - SG&A declining as % of revenue as scale increases - Significant operating leverage as fixed costs spread across more units
Tariff-Driven Used Car Demand - Auto tariffs announced March 2025 creating structural tailwind for used vehicle demand - CFO Mark Jenkins noted April 2025 tariff announcements drove "stronger demand and improved margins" - Consumers purchasing used vehicles before anticipated new car price increases - Macro tailwind could persist into 2026 if tariffs remain in place
Technology & AI Enhancements - Proprietary AI tool Carli optimizing logistics, pricing, inventory management - Same-day delivery expanded to additional markets including San Diego and Long Island - Operations now in 300+ markets across 48 states - Continued tech improvements driving conversion rates and operational efficiency
Market Expansion & Geographic Density - Over 300 markets across 48 states with increasing density - Same-day/next-day delivery capabilities expanding - 39 iconic vending machine locations - Density improvements in existing markets drive incremental growth without proportional cost increases
Recently Completed
Q2 2025 Earnings Beat (Most Recent Quarter) - Revenue: $4.84 billion (42% YoY growth) - Retail units sold: 143,280 (41% YoY increase) - Net income: $308 million (6.4% net margin) - Adjusted EBITDA: $601 million (12.4% margin - record high) - Gross profit per unit: $7,426 - Stock surged 73.46% year-to-date and ~734% over past two years
Debt Restructuring Success - Reduced total debt by $1.2 billion in 2023 restructuring - Lowered annual cash interest expense by $430 million for first two years - Moody's upgraded to B3 with positive outlook - Improved financial flexibility despite elevated 239.4% debt-to-equity ratio - Interest coverage ratio: 2.6x - Total debt: $5.1 billion
Market Position & Competitive Advantages - Currently captures ~1.5% of U.S. used car market (substantial room for expansion) - Vertically integrated model controlling sourcing, reconditioning, logistics, and financing - Rated #2 automotive brand by Forbes for customer-centricity - In-house financing through Bridgecrest Acceptance - Over 25,000 vehicles with 7-day return policy
🎯 Price Targets & Probabilities
Using gamma levels, catalyst timing, and growth trajectory analysis:
Bull Case (40% chance)
Target: $450-$520 (12-month), $600+ (2-year)
Catalysts: - Q3 earnings beat with raised guidance - Accelerated progress toward 3M unit target - Multiple expansion as profitability becomes more established - Tariff-driven demand persists through 2026 - Market share gains from traditional dealers
Gamma Support: Strong call gamma concentration supports upward moves through $380-$400 resistance
Trade Impact: Both strikes ($350/$360) would be deep ITM and highly profitable
Base Case (35% chance)
Target: $380-$450 range
Catalysts: - Mixed Q3 results - growth strong but margins pressured - Steady 25-30% growth continues as expected - Competition from traditional dealers intensifies - Some debt reduction but leverage remains elevated
Gamma Context: Trading within established support ($350) and resistance ($380-$400) bands
Trade Impact: Moderate profits on both positions, time decay offset by stock appreciation
Bear Case (25% chance)
Target: $280-$350
Catalysts: - Earnings disappointment on unit growth or margins - Subprime loan delinquencies spike in Bridgecrest portfolio - Economic recession impacts consumer auto demand - Competition from CarMax/AutoNation digital investments - Debt concerns resurface despite restructuring
Gamma Support: $350 support holds initially, deeper support at $310-$300 levels
Trade Impact: Significant losses on both positions, though long duration provides recovery time
💡 Trading Ideas
Conservative: Ride Q3 Earnings Momentum
Play: Sell $370 calls against long stock (Nov expiration)
Why this works: Collect premium at gamma resistance level, participates if stock stays range-bound post-earnings
Risk: Stock rockets above $370 and you miss upside Reward: Premium collection + dividends while holding stock
Perfect for: Long-term investors wanting to generate income ahead of volatility
Balanced: Follow Smart Money with Smaller Position
Play: Buy 1-2 $350 calls or $360 calls (Jan 2028 expiration)
Why this works: Same thesis as the $27M trade, scaled down for retail traders
Risk: $13,500-$14,000 per contract (premium paid) Reward: Unlimited upside if CVNA hits 3M unit target ahead of schedule
Perfect for: Traders who believe in multi-year growth story and can afford to tie up capital
Aggressive: Short-Term Earnings Lottery Ticket
Play: Buy $380 calls expiring November 21 (post-earnings)
Why this works: Maximum gamma resistance at $380 becomes target if earnings crush
Risk: Total loss if earnings disappoints or stock stays below $380 Reward: 3-5x return if CVNA gaps to $400+ on strong results
Perfect for: Traders who want leveraged exposure to earnings upside and can afford to lose premium
⚠️ Risk Factors
- Earnings timing risk: Q3 results on October 29 could drive massive volatility either direction
- High debt load: Despite restructuring, 2.6x interest coverage ratio and $5.1B debt remains concern
- Subprime exposure: Consumer financing portfolio vulnerable to delinquencies in recession
- Competition intensifying: CarMax, AutoNation investing heavily in digital capabilities
- Macro sensitivity: Consumer confidence and interest rates directly impact auto purchases
- Execution risk: 3M unit target requires flawless execution of aggressive growth plan
- Valuation: P/E of 84.71 prices in substantial growth - any stumble could trigger multiple compression
- Debt-to-Equity: Elevated 239.4% debt-to-equity ratio despite 2023 restructuring
🏁 The Bottom Line
Real talk: This $27M LEAP position is one of the most bullish institutional votes we've seen. Someone with serious capital is betting Carvana doesn't just survive - they're betting it dominates used car retail over the next 2+ years.
The timing is fascinating - just 8 days before Q3 earnings on October 29 that could validate (or invalidate) the growth story. The trader clearly believes the path to 3M annual units is real and that profitability expansion will drive the stock to $485-$490+ by 2028.
If you own CVNA: This institutional conviction should give you confidence to hold through earnings volatility. The gamma support at $350 provides a technical floor.
If you're watching: October 29th earnings will be critical. A beat with raised guidance validates the thesis and could trigger a breakout above $380 resistance. A miss could send it back to $300-$310 support zones.
If you're bullish: The LEAP strategy makes sense if you believe in the multi-year story, but be prepared for volatility. Consider spreading position across multiple strikes to reduce concentration risk.
Mark your calendar: - October 29, 2025 (5:30 PM ET): Q3 earnings call - this will set the tone for the next leg - January 2028: Option expiration - the finish line for this massive bet
The used car market is fragmented with 38.6M annual sales, the tariff tailwind is real, and Carvana's capturing only ~1.5% market share today. If they execute on their 3M unit target, this $27M position could look genius. If they stumble on debt or competition, it's a very expensive lesson. The next earnings report will tell us which path we're on.
Disclaimer: Options trading involves substantial risk of loss. This analysis is for educational purposes only and not financial advice. Past performance doesn't guarantee future results. The options market can be illiquid and subject to significant volatility.
About Carvana: Carvana is the second-largest used car dealer in the United States and e-commerce platform for buying and selling used cars with a $46.6 billion market cap in the retail-auto dealers & gasoline stations sector. The company generates revenue through vehicle sales, in-house financing via Bridgecrest Acceptance, and ancillary services like warranties and insurance products. Founded in 2013, Carvana operates a vertically integrated model with operations in 300+ markets across 48 states.