CarMax, Inc (KMX) is a company engaged in the retailing of used cars and as a wholesaler of used vehicles. The company’s stock is currently trading around $51.50 in a 52 week range of $34.21-$52.47. The stock has had a great year with shares gaining over 37% year to date. Options action in KMX during today’s session is suggesting that traders believe the stock will continue its run through the end of the year. Earlier in today’s trading session a trader bought 4,441 KMX Jan 52.5 calls for $1.65, a block that represents volume 9.3 times the average daily option volume in KMX. The stock is also trading well on a chart. Shares of KMX are well above the Ichimoku Cloud and have seen a nice rally over the past 2 weeks. The company is also set to report earnings near the end of December and the stock has been strong on earnings over the past 4 quarters. Given all of these factors we believe the unusual order flow in KMX provides us with a signal for a long stock swing trade in KMX.
Trade: Buying KMX Stock at $51.50 with a stop at $48.70
Risk: $2.80 per share
Target: #1: $52.90
Target #2: $54.30
Target #3: $57.10
