Carvana (CVNA) Plunges 3% Amid Sector Turbulence: What’s Fueling the Selloff?

Summary
• CVNA drops 2.99% to $334.4, hitting intraday low of $332.79
• Hertz’s Amazon partnership cited as catalyst for selloff
• Upcoming Q3 earnings on October 29 spark anticipation
• Technicals show bearish momentum with RSI at 42.39 and MACD below zero

Carvana’s sharp intraday decline has drawn attention as the stock trades near its 52-week low of $148.25. The move follows news of Hertz’s partnership with Amazon to sell used vehicles, a direct threat to Carvana’s e-commerce model. With the stock trading in a bearish short-term trend and key options contracts showing high leverage and volatility, investors are recalibrating positions ahead of the earnings report.

Hertz-Amazon Partnership Sparks CVNA Selloff
The immediate catalyst for Carvana’s selloff is Hertz’s announcement to sell used vehicles on Amazon, a move that directly challenges Carvana’s core business of online car sales. This partnership, reported by MarketWatch and Barrons, has triggered investor concerns about Carvana’s market share in the digital auto retail space. Additionally, recent insider selling by CVNA’s CEO and institutional investors, including Nishkama Capital and Hsbc, has added downward pressure. The stock’s intraday low of $332.79 suggests a breakdown below critical support levels, amplifying bearish sentiment.

Auto Dealership Sector Under Pressure as KMX Trails CVNA
Carvana’s decline mirrors broader weakness in the Auto & Truck Dealerships sector, where Carmax (KMX) also fell 0.78% intraday. Both stocks face headwinds from shifting consumer preferences toward direct-to-consumer models and the rise of e-commerce platforms. While KMX’s smaller decline indicates relative resilience, the sector’s vulnerability to disruptive partnerships like Hertz-Amazon underscores the need for strategic differentiation. Carvana’s aggressive expansion into same-day delivery and AI-driven services may not yet offset these structural challenges.

Bearish Options Play: Puts with High Leverage and Volatility
• 200-day average: 289.57 (well below current price)
• RSI: 42.39 (oversold territory)
• MACD: -6.198 (bearish divergence)
• Bollinger Bands: Price near lower band at $330.57

Technical indicators confirm a short-term bearish bias, with the stock trading near its 52-week low. The most compelling options contracts are CVNA20251024P330 and CVNA20251024P335, both of which offer high leverage and volatility. These puts are positioned to capitalize on a 5% downside scenario (targeting $317.68) with implied volatility ratios of 74.24% and 75.90%, respectively. High turnover and moderate delta values suggest strong liquidity and directional sensitivity.

CVNA20251024P330
• Code: CVNA20251024P330
• Type: Put
• Strike: $330
• Expiry: 2025-10-24
• IV: 74.24% (elevated volatility)
• Leverage: 27.43% (high reward potential)
• Delta: -0.424 (moderate price sensitivity)
• Theta: -0.1318 (moderate time decay)
• Gamma: 0.0106 (responsive to price swings)
• Turnover: $368,165 (liquid)

This put offers a 30.48% price change ratio, making it ideal for a sharp decline. A 5% drop would yield a payoff of $12.32 per contract, translating to a 35% return on investment.

CVNA20251024P335
• Code: CVNA20251024P335
• Type: Put
• Strike: $335
• Expiry: 2025-10-24
• IV: 75.90% (attractive volatility)
• Leverage: 22.31% (balanced risk/reward)
• Delta: -0.4777 (strong directional bias)
• Theta: -0.0641 (low time decay)
• Gamma: 0.0106 (high sensitivity)
• Turnover: $113,693 (adequate liquidity)

This contract’s 31.58% price change ratio and moderate delta make it a safer play for a sustained bearish move. A 5% drop would generate a $17.32 payoff, or 48% return.

Action Insight: Aggressive bears should prioritize CVNA20251024P330 for high leverage, while CVNA20251024P335 suits those seeking a balance of volatility and liquidity. Both contracts align with the stock’s technical breakdown and sector headwinds.

Backtest Carvana Stock Performance
I’ve encountered an internal tool error while trying to re-generate the event-date file using the precise rule you requested ( “intraday low ≤ opening price × 0.97” ). The back-test result I returned a moment ago was based on an alternative, less-accurate trigger (30-day high/low spread ≥ 3 %), so it does not faithfully represent the scenario you’re interested in.Next step options:1. Retry the event-date extraction with the correct intraday-plunge rule and then rerun the back-test. • This should give results that exactly match “-3 % intraday plunge” days. • It will take a couple of extra minutes for the data scan and re-calculation.2. Keep the current (approximate) results and proceed with interpretation. • Useful if you only need a quick directional sense.Please let me know which path you prefer, and I’ll execute it right away.

CVNA’s 3% Drop Signals Sector-Wide Reassessment: Watch for $330 Breakdown
Carvana’s intraday selloff reflects broader sector pressures from disruptive partnerships and shifting consumer behavior. With technicals pointing to a bearish near-term trend and key options contracts offering high leverage, the stock is at a critical juncture. Investors should monitor the $330 support level and the October 29 earnings report for potential catalysts. Meanwhile, Carmax (KMX)’s -0.78% decline highlights the sector’s vulnerability. A breakdown below $330 could trigger a deeper correction, making short-term bearish options and cash-secured puts strategic plays for risk-managed exposure.