Here's One Options Strategy For Robinhood Stock's Healthy Pullback

Core Viewpoint - Robinhood Markets (HOOD) stock is experiencing a pullback towards its 50-day moving average, with potential to revisit its 2025 high of slightly above 150, presenting an opportunity for investors to utilize options for reduced risk trading [1]. Options Strategy - A bullish diagonal spread is recommended for investors expecting Robinhood stock to move towards 150 in the coming weeks, allowing for long exposure without significant capital risk [2][5]. - The strategy involves buying a long-term call option and selling a shorter-term, out-of-the-money call option, which can help manage risk while aiming for profit [2][4]. Trade Details - The proposed trade includes buying a Dec. 19, 130-strike call for approximately $1,865 and selling a Nov. 21, 150-strike call to generate around $645 in premium, resulting in a net cost of $1,220 per spread, which is also the maximum potential loss [4]. - The estimated maximum profit from this trade is around $1,200, contingent on the stock closing at 150 on Nov. 21, with the trade's net delta equivalent to owning 26 shares of Robinhood stock [4][5]. Earnings Risk - Robinhood is scheduled to report earnings on Nov. 5, introducing earnings risk for the proposed trade if held through that date [6]. - The stock holds a Composite Rating of 98 out of a possible 99, an Earnings Per Share Rating of 80, and a Relative Strength Rating of 98, ranking first in the Finance-Investment Banking/Brokers group [6].