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]

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].