Here's A Potential Robinhood Stock Trade With Earnings On The Way

Core Insights - The article discusses the upcoming earnings report for Robinhood (HOOD) and highlights the options market's expectation of a 9.4% price movement in either direction following the announcement [1] - It suggests that selling cash-secured puts could be a profitable strategy given the high implied volatility of 110% compared to Robinhood's usual 67% [1] Options Trading Strategy - A cash-secured put involves selling a put option while setting aside enough cash to buy the stock, aiming to either let the option expire worthless or acquire the stock at a lower price [2] - For Robinhood, selling a Nov. 7 put with a strike price of 131 could generate approximately $230 in premium per contract, with a 78% chance of expiring worthless [3] Financial Metrics - The break-even price for the trade is calculated at 128.70, which is 9.6% below the current trading price of 142.40 [4] - If the stock remains above 131 at expiry, the trader could achieve a 1.8% return on capital at risk in a few days, equating to an annualized return of 163% [4] Risk and Return - The main risk mirrors that of stock ownership; significant stock price declines could lead to losses, although these can be partially offset by the premium received [5] - Cash-secured puts can generate returns or allow investors to purchase stocks at a discount, with the potential to sell covered calls for additional income if assigned [6] Stock Ratings - Investor's Business Daily rates Robinhood stock with a Composite Rating of 97, an Earnings Per Share Rating of 80, and a Relative Strength Rating of 98, ranking it fourth in the Finance-Investment Banking/Brokers group [7]