Back Derivatives Strategy

Buy Carvana (CVNA) Weekly Put Spreads Ahead of Earnings Later this Week

Published on July 27, 2026

Jeff Jacobson

Each earnings season the 22V quant team ranks companies due to report to identify ones that could potentially see outsized moves (both higher and lower) based on positive or negative earnings quality and sentiment. Stocks with a lower Earnings Turbulence ranking, higher Earnings Quality ranking and Earnings Sentiment score have better fundamental readings and are more likely to beat earnings. Stocks falling into high Earnings Quality and positive Earnings Sentiment are highlighted green, and stocks with high Earnings Turbulence and negative Earnings Sentiment are highlighted red (see below). One name they highlighted that reports next week, Carvana (CVNA), looks like an attractive candidate to own hedges on. Please recall we highlighted Southwest Air (LUV) last week as a potential earnings “turbulence” play, with an accompanying put spread hedge idea, and the stock dropped by over 6% the day they announced earnings with the put spread more than doubling in value.

As for CVNA, the technical setup looks VERY similar to what Tesla (TSLA) appeared like ahead of their report last week. TSLA then declined by ~ 17% the two days following their latest earnings announcement. In fact, 22V technical strategist John Roque has also highlighted CVNA as a very negative technical setup in his latest note (he also mentioned TSLA several times last week ahead of their report also as a short based on deteriorating technicals):

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With CVNA effectively back to the Nov/March lows and having broken below the longer-term uptrend support, perhaps we can see a similar type move to the downside like we just saw in TSLA? I think the main difference between CVNA and TSLA is that TSLA options were relatively “cheap” for the earnings, with an implied earnings move of ~ 6-7%. CVNA options, on the other hand, are pricing in a move of ~ 11.7%. CVNA options for earnings should be more expensive when you consider the fact that besides the last report in April, the AVERAGE move on the previous 9 reports was over 17%. This is a stock that has seen some outsized moves on earnings, so a disappointing report could once again see the shares move down considerably.

Much like with LUV, I prefer to own weekly put spreads in CVNA for the upcoming earnings event on 7/29. The put spread will help offset the bid to vol, while also limiting the risk to just the cost of the trade. Here is a trade I would consider if looking to position for further downside on earnings:

Trade:
Buy CVNA July 31^st $56/$46 put spread for ~ $1.80 (CVNA 61 price ref)

Trade Details:

Buying the 10-point weekly put spread in CVNA ahead of earnings on 7/29 (after the close)
Put spread starts ~ 8% below current levels, and is capped to the downside 25% lower
CVNA had averaged a move of greater than 17% on the 9 reports before the muted reaction back in April
CVNA has been highlighted by both the portfolio strategy team as well as 22V technical strategist, John Roque, as a potential decliner on earnings
Put spread offers a 4.5x to 1 max payoff on the limited-risk bearish bet
Please reach out to me or the 22V sales team for updated pricing and execution capabilities

CVNA could see a similar fate to what Tesla (TSLA) just experienced when they reported this past week
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AI-generated content may be incorrect.

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