CarMax Options Market Braces for 9% Post-Earnings Swing

The options market is anticipating significant volatility for CarMax Inc. (NYSE:KMX) shares following the company's upcoming earnings announcement. Traders are pricing in a potential share price move of approximately 9% in either direction after the used-car retailer reports its financial results before the market opens on September 29, according to options data from Bloomberg.

Historical Volatility

This implied move provides a benchmark for expected volatility, but CarMax's stock has a history of deviating significantly from these market expectations. According to the data, the company's stock has surpassed the options-implied move in two of its last eight earnings announcements.

Notably, some past reactions have been dramatic:

• In a prior September report, the stock plummeted 22.9%, vastly exceeding the 8.6% move priced in by options traders.
• Following an April announcement, shares dropped 19.7% against an implied move of just 7.5%.

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Recent Trading Patterns

More recently, however, the stock's reaction has been more subdued than the options market had anticipated. In its most recent earnings report in June, CarMax stock declined a modest 1.2%, while options had priced in a potential 12.1% swing.

Similarly, the preceding report in April saw shares fall 2.2%, which was well within the 11.4% implied move. For investors and traders, this historical data highlights the potential for significant price action, though the magnitude of the post-earnings move remains a key variable for the upcoming report.