TLDR: CVNA (Carvana) 300Put Jan2026, Jun2026 + COF (Capital One Financial) 200 Put Jun2026
Won't go much into CVNA as its been heavily discussed before, along with the much more comprehensive deep dive into their financials since a while back by [Hindenburg Research.](https://hindenburgresearch.com/carvana/) But I believe that while their books are cooked, the financial pressure will be too much to hide soon.
To preface this, I understand that during economic (non-market) downturns, stocks that deal with poor financial decisions like credit cards and used cars might seem like good investment, but the current situation is different than that of 2008 or 2020. Biggest reason being, [for the first time since 1960'](https://www.nbcnews.com/news/us-news/immigrant-population-shrinking-trump-administration-rcna225881)s US population is shrinking due to the new immigration policies.
These "recession-proof stocks" are at very big risk simply because they finance lower income, and often time immigrants, with little to no requirements. They do not care if you're an "illegal" immigrant (as long as you have an ITIN), they do not care if you have no/bad credit history, and they do not check if you have the ability to pay them back. Normally this would be fine as even if you default on the loan/debt they will claw much of it back because people usually do not file for bankruptcy and tend to make the minimum payments or work with them for a new payment plan. They can also garnish your wage or seize assets if you declare bankruptcy.
Well then you might ask, how can they fail?
**COF (Capital One Financial)**
Many of the immigrants that are being deported or are self deporting, simply max out their credit before leaving. In fact, during the six month period of January to June 2025, [US immigrant population has shrunk by 1.4 million](https://www.pewresearch.org/short-reads/2025/08/21/key-findings-about-us-immigrants/). Growing up as an immigrant child, this was always something that I saw first hand many times in both the Hispanic and Asian communities. When people were giving up on the American dream, they would often live to their fullest applying for and maxing out as many credit cards as possible, often sending money and gifts back to their home country before leaving.
Capital One (and their recently acquired Discover) is the industry leader in offering credit to people with bad to no credit history. Their application process is very easy and often no question asked where you just claim what your income is, and they'll approve you up to $2-3k per card. Applying for many credit card at once will often be a red flag, but usually the people who are doing this have already have been living in the U.S for a while with existing credit cards. Often they'll just apply for 3-4 more cards to max out before leaving, usually totaling to around $20-30k.
https://preview.redd.it/x5czfktaukpf1.png?width=1530&format=png&auto=webp&s=eb3bffb2eb74ed2ec58f453fe0f9f3fbede42f0e
Their exposure to credit card loans has gone up significantly, over 60%, after merging with Discover, but meanwhile their consumer deposits have only increased about 30%. They are also calculating the new credit card loans acquired at a lower default rate, when in reality the allowance for bad debt should be much higher.
Meanwhile, their stock has gone up to record highs due to the seemingly increase in customer, more cards issued, and volume in transactions. When comparing to industry average, their stock price seems reasonable and correlate strongly to one another. But in reality, COF is significantly worse than due to their high exposure to credit loans and significantly less deposits.
https://preview.redd.it/g8l9uxxcukpf1.png?width=647&format=png&auto=webp&s=92ce6a7a0b60a77ed2547aeafe28e9b883ae8b5c
For Example:
[Wells Fargo](https://www.wellsfargo.com/assets/pdf/about/investor-relations/earnings/second-quarter-2025-earnings-supplement.pdf): Credit Loans \~$50 Billions. Total Deposits \~$780 Billion
[Citi Group](https://www.citigroup.com/rcs/citigpa/storage/public/2025fsqtr2rslt.pdf): Credit Loans \~$110 Billion, Total Deposits \~$1.3 Trillion
[JP Morgan](https://www.jpmorganchase.com/content/dam/jpmc/jpmorgan-chase-and-co/investor-relations/documents/quarterly-earnings/2025/2nd-quarter/ac6f00d5-6753-403a-94ca-87a0296fc28b.pdf): Credit Loans \~$390 Billion, Total Deposits \~$2.5 Trillion.
[American Express](https://s26.q4cdn.com/747928648/files/doc_financials/2025/q1/Q1-2025-Earnings-Tables.pdf): Credit Loans \~$133 Billion, Total Deposit \~$146 Billion (But their clientele is much lower default rate, and often do not use them for banking)
Even FDIC believes their loans are higher risk than stated: [link](https://www.reuters.com/legal/litigation/capital-one-sues-fdic-overcharge-related-two-bank-failures-2025-09-11/)
and just today, they've adjusted their delinquency rate and charge offs. [link](https://ir-capitalone.gcs-web.com/static-files/e68bf5bc-6f01-4cff-8bfc-67aa1f087232)
**CVNA (Carvana)**
While Carvana has been a long discussed stock here, and with significant amount of people getting burned trying to short this stock this year, I believe the financial pressure will finally be catching up to them.
The first half of this year, Carvana benefitted significantly from Trump's tariff war as people chose to buy cheaper second hand cars as opposed to the higher tariffed costs of new cars. However, in the second half of next year, I believe this will change as well.
First reason being the immigration issue I previously discussed. Immigrants are often the main purchasers of use cars. Carvana does not care if you are an "illegal" immigrant, they will sell you a car regardless. These cars are often sold to them with high interest, financed by Carvana themselves, making their business model seem highly profitable. But these cars are often used for high mileage purposes like delivery services, often depreciating the vehicles much faster than Carvana expects. With significantly lower demand, higher delinquency on payments that are backed by a vehicle significantly more worn than expected, and their ever growing inventory size, Carvana is a ready to explode.
Second reason for Carvana's downfall is lower interest rates (soon) and the deductions new vehicle gets under Trump's new tax code. Used vehicles are not eligible for interest deduction, and lower interest rates means people are more incentivized and more likely to qualify for new vehicles.
Lastly, Carvana's competition is not only CarMax. Car buying/selling has never been easier with sites like Kelly Blue Book. They link you to your local dealership, often times getting a much better value due to lower overhead costs these dealership faces. They've also announced heavy ad spending last earnings (seems desperate and goes against their cost cutting to manage profitability motto).
All in all, I believe they are facing much bigger headwinds than just cooking their books can put off.
First time really posting here, and honestly pretty new to options. Previously I gambled on INTC when new CEO fired a bunch of people and wrote down their asset value, I assume the overstated balance and obsolete assets would be written off ASAP after a new CEO so any further decline can be blamed on previous CEO, thus their balance sheet was actually understated if anything, and bought INTC 20 Jan26 calls when it was @ $19. Open to feedback and discussion, maybe I am just gambling, maybe its an investment.
Positions: 5 CVNA 300 Jan26 Put , 7 COF 220 Mar26 Put
https://preview.redd.it/fdkiadehukpf1.jpg?width=1080&format=pjpg&auto=webp&s=95637ffd62164608d8e79beaf6469ad8f605ea87