Custom Truck One Skyrockets 14.12%—Is This a Bullish Breakout or a Volatile Flash in the Pan?

Summary
• CTOS shares surged 14.12% intraday, hitting a 52-week high of $6.57.
• Q2 revenue jumped 20.9% to $511.5M, with adjusted EBITDA up 16.7% to $93.4M.
• CEO Ryan McMonagle highlighted 17% growth in rental fleet utilization and 22% TES sales surge.
• Technicals show a short-term bearish trend but long-term ranging pattern, with RSI at 63.6 and MACD near zero.

Custom Truck One Source (CTOS) is trading at its highest level in a year, driven by robust Q2 results and bullish commentary from management. Despite a net loss of $28.4M, the company reaffirmed 2025 guidance, citing strong demand in infrastructure and electrification. The stock’s intraday volatility—from $6.17 to $6.57—reflects investor optimism, though technical indicators suggest caution ahead of key levels.

Q2 Earnings Surge and Sector Tailwinds Ignite CTOS Rally
CTOS’s 14.12% intraday surge follows a Q2 earnings report showcasing 20.9% revenue growth to $511.5M and 16.7% adjusted EBITDA increase to $93.4M. CEO Ryan McMonagle emphasized 17% growth in rental fleet utilization (77.6%) and 22% TES sales year-over-year, driven by demand in electric utility and telecom infrastructure. The stock’s rally aligns with management’s reaffirmation of 2025 guidance, projecting $1.97B–$2.06B in revenue. Analysts attribute the move to optimism around electrification and grid modernization tailwinds, despite the company’s net loss widening to $28.4M.

Machinery Sector Mixed as CTOS Outperforms Peers
The Machinery sector, led by Caterpillar (CAT) with a 1.06% intraday gain, remains underperforming broader markets. CTOS’s 14.12% rally contrasts with recent sector headwinds, including earthmoving safety incidents and supply chain challenges. While peers like Volvo CE report 6% sales declines, CTOS’s Q2 results highlight its unique positioning in infrastructure-driven rental and sales growth, suggesting its outperformance is driven by sector-specific tailwinds rather than broad industry trends.

Navigating CTOS Volatility: Options and ETFs for Risk-On and Risk-Off Scenarios
• 200-day average: 4.69 (below current price of $6.505)
• RSI: 63.59 (neutral to overbought)
• MACD: 0.26 (bullish bias, but signal line at 0.26 suggests consolidation)
• Bollinger Bands: Upper at $6.18, Middle at $5.50, Lower at $4.82
• K-line pattern: Short-term bearish, long-term ranging

CTOS’s technicals suggest a breakout attempt from a long-term range, with key support at $5.14–$5.20 (200D) and resistance at $6.17 (52-week high). The stock’s 14.12% intraday surge into the upper Bollinger Band indicates overbought conditions, but RSI at 63.6 suggests room for further momentum. For traders, the 30D support at $5.13 and 200D average of $4.69 form a critical baseline. Given the low turnover in CTOS options, leveraged ETFs or cash-secured puts may offer better liquidity.

Top Option 1: CTOS20251017C7.5 (Call, $7.5 strike, exp. 2025-10-17)
• IV: 33.57% (moderate)
• Delta: 0.2468 (moderate sensitivity)
• Theta: -0.00288 (high decay)
• Gamma: 0.3064 (high sensitivity to price moves)
• Turnover: 0 (low liquidity)
• Leverage Ratio: 47.11%
This call option stands out for its high gamma and moderate delta, offering amplified exposure if CTOS breaks above $7.5. A 5% upside scenario to $6.83 would yield a payoff of $0.33 per contract, though low turnover limits liquidity.

Top Option 2: CTOS20260116C7.5 (Call, $7.5 strike, exp. 2026-01-16)
• IV: 34.86% (moderate)
• Delta: 0.3685 (moderate-high)
• Theta: -0.00228 (high decay)
• Gamma: 0.2404 (high sensitivity)
• Turnover: 0 (low liquidity)
• Leverage Ratio: 18.84%
This longer-dated call benefits from higher delta and leverage, ideal for holding through potential Q4 earnings catalysts. A 5% upside to $6.83 would generate $0.33 per contract, but traders must account for theta decay over the 8-month horizon.

Aggressive bulls may consider CTOS20251017C7.5 into a breakout above $6.17, while conservative traders should monitor the 200D support at $4.69. If $6.17 fails, consider shorting volatility via puts.

Backtest Custom Truck One Stock Performance
The backtest of CTOS's performance after a 14% intraday surge shows mixed results, with varying win rates and returns over different time frames. Here's a detailed analysis:1. Frequency and Win Rates: The event occurred 609 times over the backtested period. The 3-day win rate was 54.02%, the 10-day win rate was 54.35%, and the 30-day win rate was 52.71%. This indicates that while the stock had a good chance of moving higher in the short term, the win rates declined slightly as the time frame increased.2. Returns: The average 3-day return was 0.27%, the 10-day return was 0.73%, and the 30-day return was 2.27%. The maximum return during the backtest was 4.64%, which occurred on day 58 after the surge. This suggests that while the stock had the potential to generate moderate returns, the overall performance was modest, especially considering the volatility associated with such a large intraday move.In conclusion, while a 14% intraday surge in CTOS provided opportunities for short-term gains, the overall performance was mixed, with varying returns and win rates across different time frames. Investors should consider these findings along with other market conditions and factors before making investment decisions.

CTOS’s Rally: A Catalyst-Driven Breakout or a Short-Lived Spike?
CTOS’s 14.12% surge reflects a combination of strong Q2 results, sector tailwinds, and speculative positioning ahead of its 2025 guidance. Technicals suggest a potential breakout, but the stock’s short-term bearish K-line pattern and overbought RSI (63.6) caution against complacency. Investors should watch the $6.17 52-week high as a critical resistance level and the $5.14–$5.20 support range for a possible bounce. Meanwhile, Caterpillar’s 1.06% intraday gain underscores the Machinery sector’s mixed performance, with CTOS outpacing peers. Aggressive traders may target CTOS20251017C7.5 for a 5% upside, but conservative investors should await a pullback to the 200D average of $4.69 before initiating long positions.