Quick Scalp Following Large Options Flow in CVNA

An important tool in my trading toolkit is the options flow, which I use to attempt to identify smart money trades that I might want to follow. The ones I noticed this morning (Sept. 19, 2023) were 2 back to back sweeps of weekly 44 strike puts in CVNA. The trader paid around $123k for 1,636 put contracts that expire in a bit over a week, which indicated strong conviction.

Courtesy of Blackboxstocks.com

I decided to follow the trade and bought some puts at 11:07 with the stock trading around 47.60. The stock continued to move lower, even though the overall market was getting a bit of a bounce. I had a large support level at around 46, so at 11:21, with CVNA around 46.15, I sold my puts for a 37% gain. Not bad for 14 minutes of work!

The stock then bounced at 46 up to 47.30, and then turned back down. I’ll continue watching the 46 level, and might get back into puts of it breaks 46 with volume. But when trading short term options, it’s often best to take profits when you have them, especially if the chart tells you to.

The smart money trader is most likely sticking with his puts, and will probably end up winning big. But for small traders, grabbing a piece of the pie and eating it is a lot safer than trying to rob the entire bakery.