Carvana Plummets 2.78% Amid Volatile Intraday Action—What’s Fueling the Selloff?

Summary
• Carvana (CVNA) tumbles 2.78% to $357.57, marking a sharp reversal from its 52-week high of $413.33
• Institutional investors and analysts remain bullish, with 13 'buy' ratings and a $379.65 consensus target
• Q2 earnings beat and tariff-driven demand for used cars drove prior gains, but intraday turbulence now dominates

Carvana’s stock is under pressure midday, trading 2.78% below its previous close as volatility intensifies. Despite a recent 10,000% rally from 2022 lows and strong Q2 earnings, the stock has swung between record highs and sharp corrections. Analysts remain divided between optimism over tariffs boosting used car demand and concerns over valuation sustainability.

Post-Earnings Volatility and Institutional Moves Spark Divergence
Carvana’s sharp intraday decline follows a mixed bag of catalysts. While Q2 earnings of $1.28/share (beating estimates by $0.19) and 42% revenue growth to $4.84 billion initially fueled momentum, institutional investors are now recalibrating. Alberta Investment Management Corp’s 15% stake increase and analysts raising price targets to $375–$415 highlight conviction, but short-term traders are exploiting profit-taking opportunities. Additionally, Carvana’s dynamic P/E of 96.43 suggests stretched valuations, prompting hedging activity as tariffs and macroeconomic risks linger.

Auto Retail Sector Volatility Intensifies as Carmax Gains
The Auto Retail sector is seeing divergent moves, with Carmax (KMX) rising 0.71% despite Carvana’s selloff. Tariff-driven demand for used cars remains a shared tailwind, but Carmax’s 42% revenue growth in Q2 2024 contrasts with Carvana’s recent volatility. Institutional buying in Carvana (56.71% institutional ownership) underscores its speculative appeal, while Carmax’s more stable performance reflects entrenched market confidence.

Options and ETFs for Navigating CVNA’s Volatility
• 200-day MA: 254.80 (well above); RSI: 57.95 (neutral); MACD: 7.84 (bullish histogram)
• Bollinger Bands: 319.19–374.21 (current price at 357.57, near lower band)
• 30D MA: 340.18 (support/resistance at 344.98–346.65)

Carvana’s technicals suggest a volatile but structurally bullish setup. The 52-week high of $413.33 remains a key resistance, while the 200-day MA at $254.80 acts as a long-term floor. For directional bets, Defiance Daily Target 2X Long CVNA ETF (CVNX) offers 2x leverage but has fallen 7.75% today, reflecting short-term jitters. Traders should monitor the 346.70 middle Bollinger Band as a critical support.

Top Option 1: CVNA20250808C365
• Code: CVNA20250808C365
• Type: Call
• Strike: $365
• Expiry: 2025-08-08
• IV: 43.87% (moderate)
• L/R: 67.33% (high leverage)
• Delta: 0.412 (moderate sensitivity)
• Theta: -1.931 (high time decay)
• Gamma: 0.021 (responsive to price swings)
• Turnover: $138,363 (liquid)
• Payoff (5% downside): $12.57 (max(0, 340.24 - 365) = $0)
This call offers high leverage (67.33%) and moderate delta, ideal for a rebound above $365. Theta decay at -1.931 suggests urgency, while gamma at 0.021 means it gains value quickly if the stock rises.

Top Option 2: CVNA20250808C370
• Code: CVNA20250808C370
• Type: Call
• Strike: $370
• Expiry: 2025-08-08
• IV: 44.29% (moderate)
• L/R: 97.35% (high leverage)
• Delta: 0.315 (moderate sensitivity)
• Theta: -1.593 (high time decay)
• Gamma: 0.019 (responsive to price swings)
• Turnover: $337,726 (liquid)
• Payoff (5% downside): $7.57 (max(0, 340.24 - 370) = $0)
This contract combines high leverage (97.35%) with moderate delta, positioning well for a breakout above $370. Theta decay (-1.593) and gamma (0.019) reinforce its suitability for short-term rallies.

Aggressive bulls should consider CVNA20250808C370 into a bounce above $370. If $346.70 breaks, CVNA20250808P340 offers short-side potential.

Backtest Carvana Stock Performance
The backtest of CVNA's performance after a -3% intraday plunge shows favorable short-to-medium-term gains. The 3-Day win rate is 52.43%, the 10-Day win rate is 53.60%, and the 30-Day win rate is 61.31%. Additionally, the maximum return during the backtest period was 19.70% over 30 days, indicating potential for recovery following a significant pullback.

CVNA’s Volatility Presents High-Risk, High-Reward Opportunities—Act Fast
Carvana’s intraday selloff reflects profit-taking after a historic 10,000% rally, but fundamentals remain robust with tariffs and used-car demand intact. The 200-day MA at $254.80 and 346.70 support level are critical to watch. For aggressive traders, the CVNA20250808C370 call offers 97.35% leverage to capitalize on a rebound. Meanwhile, the sector leader Carmax (KMX, +0.71%) provides a safer alternative for those wary of CVNA’s volatility. Short-term traders should prioritize liquidity and theta decay metrics in options, while long-term holders can ride the 96.43 P/E-driven optimism—if tariffs and demand hold.