Carvana goes ludicrous speed, Netflix and Tesla get their shot after the close.

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Good morning!


Carvana is up an unreal 35%+ this morning after surprising the market with an early earnings report and a debt restructuring plan. This obviously caught the option market completely off guard. Options were only pricing about a 10% move for the rest of this week. But this move is even way beyond what options were pricing for Carvana’s assumed reporting date, where they had the expected move at about 27%. Either way, it’s difficult for options traders to properly price something moving like CVNA has been lately. It’s been having regular 10% type gaps/moves and on past earnings, it’s regularly moved 30%+. Options can only pump up so much to account for moves like that as traders and market makers are very wary of properly pricing them (compared to how the stock is moving) and then getting stuck with all that premium when the music stops. Here’s how options were priced before the surprise:

r/options - Expected moves, Carvana, Goldman, Tesla, Netflix

Now attention turns to Netflix and Tesla who report after the close. Tesla options are pricing about a 6.5% move. Netflix options are pricing about a 7.6% move.

Today’s Earnings Highlights:

  • Tesla, Inc. (TSLA) Expected Move: 6.48%
  • Netflix, Inc. (NFLX) Expected Move: 7.41%
  • International Business Machines Corporation (IBM) Expected Move: 3.26%
  • The Goldman Sachs Group, Inc. (GS) Expected Move: 3.20%
  • U.S. Bancorp (USB) Expected Move: 3.90%
  • Las Vegas Sands Corp. (LVS) Expected Move: 4.30%
  • Halliburton Company (HAL) Expected Move: 3.68%

Full list here: Options AI Earnings Calendar

Economic Calendar:

  • At 07:00 AM (EST) MBA 30-Year Mortgage Rate (Jul/14) Impact: Medium
  • At 08:30 AM (EST) Building Permits MoM (Jun) Estimates: -2.3, Prior: 5.6
  • At 08:30 AM (EST) Housing Starts MoM (Jun) Estimates: -10.2%, Prior: 15.7
  • At 08:30 AM (EST) Housing Starts (Jun) Estimates: 1.48, Prior: 1.559
  • At 08:30 AM (EST) Building Permits (Jun) Estimates: 1.49, Prior: 1.496

Scanner Highlights:

  • Overbought (RSI): NKLA (81), HOOD (80), SPOT (79), DASH (78)
  • Oversold (RSI): CGC (16), T (18)
  • High IV: NKLA (+216%), AMC (+191%), MANU (+161%), BYND (+155%)
  • Unusual Options Volume: CAT (+1162%), MSFT (+759%), MS (+759%), ALLY (+695%), SCHW (+672%), GS (+604%), NFLX (+500%), PACW (+495%)

Chart of the Day:

Comparing the breakeven on a Tesla at the money call vs at the money call spread, vs at the money credit put spread (based on yesterday’s closing prices):

That’s all for now. Have a great day!

The Options AI Team

Based upon publicly available information derived from option prices at the time of publishing. Intended for informational and educational purposes only and is not any form of recommendation of a particular security, strategy or to open a brokerage account. Options price data and past performance data should not be construed as being indicative of future results and do not guarantee future results or returns. Options involve risk, including exposing investors to potentially significant losses and are therefore not suitable for all investors. Option spreads involve additional risks that should be fully understood prior to investing. Securities trading is offered through Options AI Financial, LLC, member FINRA and SIPC.

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