Carvana's 4.04% Plunge: A Volatile Crossroads for Retail Investors

Summary
• Carvana (CVNA) plunges 4.04% to $344.98, breaking below its 50-day moving average of $337.99
• CEO and major shareholder sell $38.67 million in shares, signaling bearish sentiment
• Bearish $350 put option trade sees $29.1K in premium, amplifying short-term bearishness

Carvana’s intraday selloff has ignited a firestorm of speculation as the stock trades near its 200-day low of $239.95. With a $344.98 price tag, the stock has erased $13 billion in market cap since its 52-week high of $413.33. Analysts are dissecting the bearish options flow, insider sales, and technical indicators to gauge whether this is a buying opportunity or a deeper correction.

Insider Sales and Bearish Options Signal Market Caution
Carvana’s 4.04% intraday drop to $344.98 has been fueled by a confluence of bearish signals. CEO Ernest C. Garcia III and major shareholder Ernest C. Garcia II sold $3.48 million and $33.19 million worth of shares, respectively, triggering investor anxiety. Simultaneously, a $350 put option trade with $970.0 premium per contract and 30 contracts traded signaled institutional bearishness ahead of the August 22 expiration. The stock’s 3.66% drop has also triggered a MACD crossover below the signal line (-0.86) and an RSI of 57.8, suggesting overbought conditions are unwinding. Analysts at DA Davidson and William Blair have maintained 'neutral' to 'outperform' ratings, but the recent price action highlights growing caution.

Automotive Retail Sector Diverges as Carmax Gains Ground
While Carvana’s stock tumbles, Carmax (KMX) defies the trend with a 0.87% intraday gain. The sector’s divergence underscores CVNA’s unique challenges: its 93.4 P/E ratio far exceeds KMX’s 12.3, and its 3.57 beta amplifies volatility. The broader automotive retail sector remains cautious, with Rivian (RIVN) down 2.5% and Tesla (TSLA) off 4.64%. CVNA’s selloff appears more tied to its debt load (2.51 D/E ratio) and insider sales than sector-wide headwinds.

Options and ETF Plays for CVNA’s Volatile Outlook
• 200-day average: $263.36 (far below)
• RSI: 57.8 (overbought)
• MACD: -0.86 (bearish crossover)
• Bollinger Bands: $319.77–$377.33 (current price at 346.34 near lower band)

CVNA’s technicals suggest a short-term bounce from the 200-day low of $239.95 but a bearish near-term outlook. The YieldMax CVNA ETF (CVNY) at $41.55 (-2.58%) and 2X leveraged CVNX ($21.18 -7.71%) offer amplified exposure. Key support at $342.30 (intraday low) and resistance at $360.61 (intraday high) define the trading range.

Top Option 1: CVNA20250829C350 (Call)
• Strike: $350 • Exp: 8/29 • IV: 48.5% • Leverage: 35.61% • Delta: 0.459964 • Theta: -1.113166 • Gamma: 0.013650 • Turnover: $261,023
• Payoff (5% downside): $344.98 → $328.97 → max(0, 328.97 - 350) = $0
• Why: High leverage and moderate delta balance risk/reward for a potential rebound.

Top Option 2: CVNA20250829C355 (Call)
• Strike: $355 • Exp: 8/29 • IV: 47.8% • Leverage: 45.62% • Delta: 0.391970 • Gamma: 0.013407 • Turnover: $134,697
• Payoff (5% downside): $344.98 → $328.97 → max(0, 328.97 - 355) = $0
• Why: Strong gamma and liquidity make it ideal for directional bets if the stock breaks above $355.

Aggressive bulls should consider CVNA20250829C350 into a bounce above $350.

Backtest Carvana Stock Performance
The conclusion is derived from the backtest data where the 3-Day win rate is 53.02%, the 10-Day win rate is 53.36%, and the 30-Day win rate is 61.74% following a -4% intraday plunge in CVNA. This indicates a higher probability of positive returns in the short term after the dip. The maximum return during the backtest period was 19.90% over 30 days, suggesting that while there is some volatility, significant gains can be achieved in the medium term.

Act Now: CVNA at Crossroads of Technicals and Sentiment
Carvana’s 3.66% drop has created a critical juncture for investors. The stock’s 57.8 RSI and bearish MACD suggest a near-term correction, but its 93.4 P/E and 3.57 beta indicate long-term growth potential. Watch for a breakdown below $342.30 (intraday low) or a rebound above $360.61 (intraday high). Carmax’s 0.87% rise highlights sector resilience, but CVNA’s unique challenges—insider sales and debt load—demand caution. Aggressive bulls should target CVNA20250829C350 if the stock breaks above $350.