Shares of Carvana (NYSE:CVNA) continue to move against expectations, even amid not-so-encouraging news. Earlier this week, a securities filing disclosed that a Carvana insider sold 20,000 shares of CVNA stock. While insider selling doesn’t necessarily imply bad news, it’s not particularly reassuring. Nevertheless, the bulls remain undeterred, with CVNA gaining about 13% as of this writing.
Per the filing, Vice President, General Counsel and Secretary Paul Breaux sold CVNA stock on Sept. 11 at a price of $49 per share. According to Carvana’s website, Breaux has served in his role as General Counsel since August 2015.
According to Gurufocus, over the trailing 12 months, “there have been 6 insider buys and only 1 insider sell at Carvana” which suggests that Breaux’s recent sell “could be a strategic move rather than a reflection of the company’s performance or future prospects.”
It’s a fair point. While insider buying tends to have one implication — that insiders believe shares will rise in value — there can be myriad reasons for insider selling. Still, the ambiguity of the transaction comes amid a time of concern related to excess speculation. Indeed, CVNA stock has gained more than 1,100% year-to-date (YTD).
Options Market Points to an Epic Showdown for CVNA Stock
In possibly another case of meme traders facing off against established Wall Street institutions, an epic showdown appears to be materializing in the options arena. On one hand, a heavy concentration of big block trades indicate possible institutional bearishness. But on the other, Carvana’s heightened short interest has sparked a contrarian reaction.
Not unexpectedly, CVNA stock is a highlight for unusual options volume based on the delta between the Thursday session volume and the trailing one-month average metric. Transactionally, call volume has reached 171,430 contracts against put volume of 74,677 contracts as of this writing.
On paper, this ratio seemingly favors the bulls. However, Fintel’s screener for options flow — which focuses on big block trades — indicates significant volume for sold calls, which generally feature a bearish implication.
Still, the resultant pessimism — which has led to a short interest of 45.17% — has so far failed to dent contrarian enthusiasm. Should CVNA stock continue to rise, the shorts may be forced to cover their positions, thus yielding even more bullish pressure.
Why It Matters
Apparently, Wall Street analysts want little to do with the showdown, pegging CVNA stock as a consensus hold. This assessment breaks down as one buy, 11 holds and five sell ratings. Overall, the average price target for shares lands at $40.47, implying more than 27% downside risk.
On the date of publication, Josh Enomoto did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
