Options Traders Target Surging CarMax Stock

CarMax reported better-than-expected profit for the third quarter

Deputy Editor
Dec 21, 2023 at 3:01 PM
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Options traders are targeting CarMax Inc (NYSE:KMX), after the used-car retailer reported better-than-expected third-quarter earnings of 52 cents per share, more than doubling the 24 cents per share from the same quarter a year ago. Cost cuts helped soften the blow of lower demand amid higher interest rates, as the company offered significant discounts on vehicles. 

So far today, 16,000 calls and 14,000 puts have been exchanged, which is already 3.5 times KMX's average daily options volume. The weekly 12/22 83-strike call is the most popular contract, followed by the 12/22 75-strike put, with new positions being bought to open at both. 

Up as high as $84.20 at its peak today, the shares are currently 4% higher at $77.67. The $84 level could be moving in as pressure, as it was the home of KMX's October peak, before the stock saw a wave of negative price action. Since the start of the year, the equity is up 27.1%. 

KMX Dec21

It's also worth noting that short interest has been building, and now represents 12.2% of the stock's available float. It would take shorts nine days to cover their bets, at CarMax stock's average pace of trading. 

 

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