Buy Call HOOD

September 5, 2024
Roll Existing Position: Against HOOD January 15 Calls, Buy Back the January 37 Calls and Sell the January 26 Calls.

HOOD, like many stocks, is acting fine but is hardly showing real buying power as of late. Because of this just “ok” stock action, let’s buy back the January 37 calls that we originally sold for $1.88, for $0.15, and then sell the January 26 calls for $0.80 (approximately).

To execute this trade you need to:
Buy to Close the HOOD January 37 Calls
Sell to Open the HOOD January 26 Calls

After this adjustment our position will be:
Long HOOD January 15 Calls
Short HOOD January 26 Calls

This adjustment will drop our cost basis on the $11-wide bull call spread to $0.17 (approximately).

The ideal spot for this new position is at 26 or above on January expiration.

This adjustment will be a mistake if HOOD trades well above 26 on January expiration as I will have limited our upside potential.

June 6, 2024
Adjust Existing Position: Against HOOD January 15 Calls, Sell the January 37 Calls (exp. 1/17/2025) for $1.70 or more.

HOOD is breaking out to a new high yet again today, which is great for our January 15 call which is now at a potential profit of approximately 250%. And while I think the odds favor HOOD stock continuing to trade higher, just in case it’s due to cool off, let’s sell a FAR out-of-the-money call to lower our cost basis on our trade.

To execute this trade you need to:

Sell to Open the January 37 Call

After this trade our position will be the following bull call spread:

Long HOOD January 15 Call
Short HOOD January 37 Call

This call sale will drop our cost basis to $1 approximately.

Please note, even though we are selling a call today, our position is without question still bullish.

Finally, this call sale will be a mistake if HOOD trades well above 37 on January expiration. However, that would be a great scenario as our position would close for a profit of approximately 715%.

May 8, 2024
Robinhood (HOOD) Earnings

Today after the close Robinhood (HOOD) will report earnings. Headed into the announcement the stock has been mostly rangebound, much like most stocks, for the past several weeks.

I am going to hold my position through the event as we have twice taken profits and option activity has been strong.

That being said, I do want to warn that earnings season has been a total mine field as of late, and should HOOD disappoint, the stock could get hit hard. For that reason, if you want to reduce your risk you must Sell to Close before the end of the trading day today.

HOOD - With the stock trading at 18, the options market is pricing in a move of $2.50 this week, or 15.5 to the downside and 20.5 to the upside.
Open interest is skewed bullish on a ratio of 2.4:1 call vs. put.
Skew is pricing in extreme downside risk and upside interest.

March 8, 2024
Sell a Third of Existing Position: Sell a Third of your HOOD January 15 Calls for $4.70 or more.

HOOD continues to bump up to the 17 level in the stock and looks great. Today let’s stick to the system, lock in a profit of approximately 75% and then go for the home run on the balance.

To execute this trade you need to:
Sell to Close a Third of your HOOD January 15 Calls

As is always the case when we lock in profits on a piece of our position, we hope this sale is a mistake and the stock and our calls trade much higher in the weeks/months to come.

February 26, 2024
Sell a Third of Existing Position: Sell a Third of your HOOD January 15 Calls for $3.30 or more.

Very quickly our HOOD position is at a potential profit of approximately 25%. Let’s stick to the system, lock in a very quick profit and then go for the home run on the balance.

To execute this trade you need to:
Sell to Close a Third of your HOOD January 15 Call

As is always the case when we take partial profits, we hope this initial sale is a big mistake and the stock and our calls trade much higher in the weeks/months to come.

February 22, 2024
Buy Robinhood (HOOD) January 15 Calls (exp. 1/17/2025) for $3 or less.

As I wrote in my Weekly Review, Robinhood (HOOD) was racing to the top of my watchlist after a strong earnings report and very bullish option activity even after the stock soared higher, including:

Buyer of 5,000 January 20 Calls for $1.50 – Stock at 14

Buyer of 30,000 May 14 Calls for $1.15 – Stock at 13

Buyer of 5,000 June 15 Calls for $1.15 – Stock at 13.25

Buyer of 4,000 May 14 Calls for $1.48 – Stock at 13.75

Buyer of 3,000 June 15 Calls for $1.30 – Stock at 13.75

I could easily add another 20 bullish options trades in the last couple of days to the list above, but you get the gist, options traders are looking for HOOD to continue to move higher.

And while today is an AI day for the market following NVDA’s earnings, we have enough exposure to that group via NTNX/PLTR/MRVL/TSM and I want to diversify away from that story a bit via HOOD which could be a new earnings star.

To execute this trade you need to:
Buy to Open the HOOD January 15 Call

The most you can lose on this trade is the premium paid, or $300 per call purchased.

The risks I see in this trade are the following:

General market risk, and to be open, there have been some yellow flags under the surface of the market in the last couple days.

HOOD has a bit of a meme stock/momentum play to it, as the stock used to be a TOTAL meme stock, though it has likely graduated from that. The reason I mention this is if momentum plays like HOOD fall, the stock declines could be swift.

That being said, for now at least, the market continues to look mostly strong, option activity is wildly bullish, and to pay $3 for nearly a year’s worth of exposure to a potential emerging earnings star is a great risk/reward opportunity.