SHORT CVNA

This is a straightforward play on a fundamentally weak company with bad press, a broken business model, an unsustainable P/E ratio, and technical patterns lining up for a significant move. The Head & Shoulders (H&S) pattern is the main focus, and this trade hinges on the neckline holding. If it breaks above the neckline, the trade is invalidated.

Trade Plan Details
1. DCA INTO PUTS:
Entry Zone: Short at the $230–$240 range.
March Contracts: Target $180 or $150 puts, depending on risk appetite.
Use DCA to average into puts, increasing position size as CVNA nears $240 (neckline resistance).
2. POSITION SIZING:
Start with 1 contract at $230, double at $235, and max out at $240.
This ensures a manageable risk-reward setup while preparing for the H&S invalidation above $240.
3. TARGETS:
Short-term Target (50% Fib): $177 (Fib retracement).
Long-term Target: $133 (next major support).
Potential for 1:8 risk-reward ratio, making this a high-reward opportunity.
4. STOP LOSS:
Stop out if CVNA breaks above $240 (neckline) and closes above it on the daily chart.
Key Supporting Arguments
Fundamentals:
Who wants to buy a car online without a test drive?
Sky-high P/E ratio indicates overvaluation, unsustainable in a rising rate environment.
Technicals:
The H&S neckline around $230 is the critical resistance level.
Break of the neckline confirms the bearish continuation.
Fib Retracements:
50% Fib ($177) is a realistic target.
61.8% Fib ($133) offers additional downside if momentum continues.