Short Carvana

Carvana was another high-conviction short position expressed through put options. I wrote an article laying out the thesis — that Carvana would collapse due to a credit crunch, lofty valuation, and potential fraud in their financials. The setup was clear to me, but the timing wasn’t immediate.

I had to endure being down on the position for a bit. I was early, which is one of the hardest parts of shorting - being right on the thesis but having to sit through the pain of the market not catching up yet. I averaged down on the position, had conviction, and it has begun to play out. I have taken profits on the days that had large drops and IV spikes and have also added to the position. I'm still in it as I believe the trade has not played out fully.