Traders expect a monster 18% move in Carvana post earnings this week. How to play it

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Carvana Co News

Personal Finance,Markets,Breaking News: Markets

Mike Khouw gives an options trade on the used auto seller.

One of the most remarkable stocks over the past five years is Carvana . It reports earnings this week and traders are expecting a monster move. I'll lay out a trade to capitalize on those expectations. Carvana's business model revolves around buying and selling used cars online, aiming to streamline the car buying process by eliminating the traditional dealership experience.

mountain Carvana Carvana will report earnings this coming Wednesday after the bell and the 18% earnings-related implied move ranks near the top of the Russell 1000 companies regarding earnings volatility. Expectations of high volatility are understandable, particularly when considering a few fundamental negative and positive drivers: The company's balance sheet is highly leveraged, ~ with 5.7 billion in net debt .

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