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CNBC
10 hours ago
- Automotive
- CNBC
Using options to buy the recent dip in this used car retail stock
Despite beating earnings estimates and maintaining solid profit margins, Carvana (CVNA) has been under pressure recently, losing more than 9% in the last eight sessions — all on tariff scare headlines. While tariffs are a legitimate concern for many companies, this kind of sharp drop is a textbook example of a knee-jerk reaction — and the market is full of them. As a mean reversion trader, the goal is to identify these overreactions and take the other side when the setup aligns. In this case, I'm using a couple of key technical indicators to spot whether CVNA is setting up for a bounce: RSI (relative strength index): RSI is a flexible indicator that helps identify both trend reversals and continuations. In this case, the signal is pretty clear — RSI reversed course on 6/26 and has been climbing since, suggesting that the recent bearish momentum may be fading. Support/resistance: Support and resistance levels are often simple to spot — and in the chart below, you'll see clear support around the $280 level. What's interesting is that CVNA is starting to bounce right off that zone, reinforcing its significance. MACD (5,13,5): I like to bring the MACD indicator into my analysis from time to time because it's a solid tool for spotting early entry signals. While the standard MACD can lag a bit, I often use a short-term version to catch momentum shifts sooner. A bullish crossover — where the MACD line crosses above the signal line — typically acts as an early signal to consider getting into a trade. In this case, MACD hasn't confirmed the setup just yet, but it's definitely worth keeping an eye on for potential confirmation. The trade setup: CVNA 305-310 bull call spread To take advantage of this mean reversion setup, I'm using a bull call spread — a strategy that allows me to risk as little as $250 per trade and scale up easily by adding more contracts. For instance, using 10 contracts means risking $2,500 for a shot at $2,500 in profit, as long as CVNA closes at or above $310 by expiration — just $3 above its current price. With the stock trading near $307, the trade is built by buying the $305 call and selling the $310 call. It's a simple, defined-risk structure that gives me upside exposure without tying up too much capital. I break down setups like this in detail in my book Mean Reversion Trading , and you can explore tons of real-world examples at . Here is my exact trade setup: Buy $305 call, July 18 expiry Sell $310 call, July 18 expiry Cost: $250 Potential Profit: $250 -Nishant Pant Founder: Author: Mean Reversion Trading Youtube, Twitter: @TheMeanTrader DISCLOSURES: None. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
CNBC
3 days ago
- Business
- CNBC
How to trade the S&P 500's march to record highs using options as volatility remains elevated
Equity bears are growling, and bulls are sharpening their horns. I see an imminent retest of the S & P 500's all-time high as a market melt-up seems to be underway. I want to use options to carefully capture another leg up after the SPDR S & P 500 ETF Trust (SPY) has bounced 21% since "liberation day" lows back in April and geopolitical tensions ratchet up. In the wake of President Donald Trump announcing his surprising trade tariff plans back in April, there were calls for a recession, a repeat of Black Monday and hyper-inflation. In addition, a cackle of analysts scrambled to reconfigure their bullish 2025 S & P 500 price targets substantially lower after a nearly 20% acute drop in the benchmark equity index. I was a lonely bull at the time and believed it was an overreaction to most likely a brash negotiating tactic that has been a characteristic of President Trump for decades. Leaning into the equity discount when SPY traded down to a ridiculous oversold condition at $481 was nerve-wracking — but when volatility spikes (VIX) up above 50 let alone 60, that is the time to buy stocks, not when the VIX is under 15. No matter how bad it feels to be buying. Between April 9 and May 12, the VIX plummeted from a high of 57.96 to below 20, a roughly 65% drop in just 22 days. The VIX's historic (3 rd quickest drop ever) drop signaled a swift return to market stability, with the S & P 500 rebounding over 6% by mid-May and up 20% by June from its April lows. I believe all market moves are exaggerated these days (to both the downside and upside), and that is why I believe the nerve of the bears will be tested above 6,150 in the S & P 500 Index soon. The timing of this test is remarkable as options expiration is this week, and markets are closed on Thursday for Juneteenth. This phenomenon is sometimes referred to as the "option-expiration week effect". Large-cap stocks with high options trading volume tend to see particularly strong performance during these weeks. With the VIX tethered to 20, options premium has certainly become less expensive, but by no means is it cheap. Therefore, I want to buy a call spread as selling that upside call will offset some of the cost associated with owning the opportunity to capture a new all-time high test ($613.23 on Feb. 19 for SPY). Defining risk is critical after the bounce markets have seen since early April. The trade: Buying a call spread Bought the July 18 $605 SPY call for $8.30 Sold the July 18 $620 SPY call for $2.65 This spread costs an investor $5.65 or $565 per one lot spread This spread was established when SPY was trading just above $600 ISCLOSURES: Kilburg is long this spread and long SPY. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
CNBC
6 days ago
- Business
- CNBC
These stocks, including Oracle, are among the most overbought on Wall Street
Several stocks could soon be due for pullbacks after seeing sizable gains this week, according to a widely-used technical indicator. Stocks took a hit Friday after Israel launched a series of airstrikes on Iran in the largest attack on the Islamic Republic since the Iran-Iraq war in the 1980s. Following Israel's attack, which killed at least three of Iran's senior military leaders, Iran launched more than 100 drones toward Israel. The attacks sent investors out of stocks and into safe-haven assets like the U.S. dollar and gold, both of which rallied Friday. The S & P 500 finished Friday's session down more than 1%, making the week-to-date loss 0.4%. The Nasdaq Composite and the Dow Jones Industrial Average also finished in the red for the period, posting a loss of 0.6% and 1.3%, respectively, on the week. Using the stock screener tool , CNBC Pro looked for the most overbought and oversold stocks by measuring their 14-day relative strength index, or RSI. An RSI reading above 70 can indicate that a stock may be overbought and move lower in the near term, while an RSI below 30 might signal that a stock is oversold and see a future move higher. Oracle was the most overbought stock in the S & P 500 this past week, with an RSI around 90.4. Shares of the software maker rose almost 8% on Friday, reaching an all-time high and extending Thursday's 13% rally. Over the course of the entire week, Oracle surged 24%. Analysts surveyed by LSEG have an average price target on the stock of around $205, implying almost 5% downside from Friday's closing level, although many of those targets may rise in the wake of Oracle's latest earnings this week. Most of the week's gains came after Oracle's fiscal fourth quarter results topped Street estimates. CEO Safra Catz said cloud infrastructure revenue is expected to rise more than 70% in fiscal 2026, adding that the fiscal year "will be even better as our revenue growth rates will be dramatically higher." Micron Technology also showed up among the most overbought stocks, with an RSI of 85.1. Shares jumped more than 6% over the past week, its third straight weekly gain, putting its year-to-date gain at more than 37%. The stock was marginally lower on Friday, snapping a nine-day advance. Thursday, Micron announced plans to invest about $200 billion in U.S. semiconductor manufacturing in a move that will create 90,000 direct and indirect jobs. J.M. Smucker was on the week's oversold list, with an RSI around 27. Though most Wall Street analysts rate the peanut butter and jelly maker no more than a hold, according to LSEG ,the consensus price target of $113 implies more than 18% upside from Friday's close. Shares came under pressure in the past week, falling 14%, after fiscal fourth-quarter revenue of $2.14 billion missed the $2.18 billion that analysts polled by FactSet had expected, though earnings topped estimates. Smucker's full-year earnings guidance also missed Street expectations. The stock has now fallen in seven out of the past eight weeks. PG & E shares fell 13% this week, its fourth straight weekly decline, and the California utilility now has an RSI of 20.6. The stock has taken a beating this year, tumbling 32% compared to 1.6% rise in the S & P 500.
CNBC
13-06-2025
- Business
- CNBC
What the charts say about oil's next move, according to Carter Worth
The news-related spike in oil leaves WTI crude at a difficult level where overhead supply comes into play. As seen in the chart below, oil has advanced from $55 a barrel to $77 a barrel (plus $22 a barrel... +40%), and is now back up "to the penny" to the well-defined downtrend line of the past 12 months. If one is long, we would harvest/take profits/sell calls/take measures of some kind. And for those who engage in shorting, we would sell here. (Check out Carter's for actionable recommendations and live nightly videos.) DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
CNBC
09-06-2025
- Business
- CNBC
Citigroup joins chorus of Wall Street banks and hikes S&P 500 target
And Citigroup makes five in just one week. Citigroup raised its year-end S & P 500 target nearly 9%, to 6,300 from 5,800, implying that the market can rise another 5% from current levels. Strategist Scott Chronert noted that while "high policy volatility is likely to continue," market fundamentals appear to be solid. "No doubt, policy volatility is likely to persist as are numerous other risks. This keeps us reticent to chase rallies but more inclined to buy pullbacks," he said. "What the first half has told us is that fundamental volatility may be more manageable as tariffs, taxes, budget/deficit, rates, currency, geopolitics, etc. will all continue to remain in the financial news headlines." With this change, Chronert became the fifth sell-side strategist tracked by CNBC Pro to increase his 2025 S & P 500 forecast. Here are the other four target hikes in the past week. Lori Calvasina of RBC : to 5,730 from 5,550 Binky Chadha of Deutsche Bank : to 6,550 from 6,150 Venu Krishna of Barclays : to 6,050 from 5,900 Dubravko Lakos-Bujas of JPMorgan : to 6,000 from 5,200 Those changes come as the Street grows less worried about rising trade tensions between the U.S. and other countries. On Monday, U.S. and Chinese officials were in London to discuss tariffs. "There will likely be posturing for threats of higher tariff rates on a country by country basis, as well as additional sectoral tariffs put in place, but we do not think this will produce the same shock/surprise that set off the April drawdown," Citi's Chronert wrote. "We saw evidence of this dynamic [last week] with no market reaction to steel and aluminum sectoral tariff rates being raised from 25% to 50%." "Trading moves aside, we expect investors will tend to look through shorter term policy noise in aggregate," he added.
