Copart, Inc. (CPRT), Trending Stock Report

Copart, Inc. (CPRT) appeared on our list of compressed stocks this morning. CPRT is an auto auction company. They let dismantlers, body shops, salvage buyers, dealers, and individual consumers purchase heavily used, wrecked and salvage vehicles through online auctions. The company has a history of making big moves within a few weeks after a compression signal and the options are relatively cheap.

This MDM graph compares the modeled expectations of current options prices (the orange line) to the actual movement of CPRT’s stock price over the past 3 years. You can see that the actual behavior (the blue histogram) made big moves more frequently than the modeled options prices currently expect. This graph tells us the CPRT options expiring on August 16^th are inexpensive relative to the stock’s behavior over the last 3 years.

This Volatility Cone shows us that the volatility expectations (the yellow dots) for each term are below the 1-year historical volatility average. To learn more about the Volatility Cone, click here. This confirms that options on CPRT are relatively cheap. That’s good news for option buyers.

This Volatility Term Structure shows us the implied volatility of the at-the-money options for each expiration term. To learn more about Volatility Term Structure, click here. You can see that the August 16^th expiration is very near the lowest volatility expectations. By going to the August 16^th expiration, we get good liquidity with enough time for the compression signal to play out.

CPRT’s share price is compressed and the stock is trending flat. Volatility expectations and options prices are relatively low. When CPRT’s stock price gets compressed, the stock tends to make a big move within the next few weeks. This gives option buyers an advantage.

To get the details on today’s trade, be sure to read today’s ODDS Online Daily Option Trade Idea.