Robinhood Markets (HOOD) Might Be a UFO!
I decided to shop for my Halloween outfit and came upon this spooky disguise! The scythe keeps whispering something about wanting to reap souls? I think it might be a UFO! But before I get to that…
What’s the Word on the Street?
The market is mostly up, except for the Dow which is basically flat. Wednesday is the big day this week for the market. The Federal Reserve will be meeting Tuesday and Wednesday and will announce their interest rate cut decision on Wednesday afternoon. It’s widely expected that there will be a 25 basis point cut this week, but what will be most interesting are any clues as to how many more cuts could be in store this year, if any.
Robinhood Markets (HOOD)
What Is It?
Robinhood Markets, Inc is a financial services platform, which engages in the provision of retail brokerage and offers trading in U.S. listed stocks and Exchange Traded Funds, related options, and cryptocurrency trading, as well as cash management, which includes debit cards services. The company was founded by Vladimir Tenev and Baiju Prafulkumar Bhatt in 2013 and is headquartered in Menlo Park, CA. The listed name for HOOD is Robinhood Markets, Inc. Class A Common Stock.
Why Is It a Possible UFO?
Primarily its current share price relative to its fair value and what other option traders expect are the reasons HOOD could be a UFO.
What About Recent News?
I traded HOOD recently and was able to close out fairly quickly due to it being selected to join the S&P (which I predicted last time I wrote about HOOD).
Since then, HOOD held a conference to announce many new features. It also filed to launch a closed-end fund for retail traders to access private firms.
What’s the Current Price?
It goes without saying HOOD has had an incredible run over the past 12 months. Year to date it’s up almost ~200% and ~55% in the past 3 months. It’s up again modestly over the past month and week ~5%, but down on the day.
What’s the Fair Value?
I’d first like to emphasize that fair value is subjective. Many analysts at many banks and institutions rate stocks differently and assign fair value in their own unique way. So, what I like to do is take all the recent fair values since the most recent earnings report and average them. In this case…
Since HOOD’s most recent earnings report on 07/30/2025, it has received 9 ratings and taking the average, the fair value might be somewhere around: $122.11.
7 ratings are a Buy, 2 are a Hold. The lowest price target is $106, while the highest is $145.
What Do Options Traders Expect?
Calls are trading over equidistant Puts, which means traders think there is a chance to the upside. You can see because… forget about the green columns and focus on the red. Notice how on the right side for the $112 Put it says $8.55, it’s $8.75 for the equidistant Call at $117.
The premium (the credit you receive for executing the trade) is currently less for selling Puts, as opposed to selling Calls. Basically because of that, option traders expect the stock to go up, rather than down.
How About Volatility?
The IV rank (the purple line) for HOOD (stock price in blue) is currently hovering around 14.57, which is fairly low (IV rank goes from 0-100). This makes short strategies (which are what I prefer) less attractive.
What's the Trade?
My preferred trade is a variation of the wheel without the rolling, AKA cash-secured puts. I typically like to target stocks that offer a dividend and are below fair value.
Why a dividend? If the trade results in assignment and I’m on the hook for X amount of shares, I can at least be satisfied knowing I picked a (hopefully under fair value) company that will pay me a small amount while I run the other side of the trade AKA covered calls.
HOOD does not offer a dividend, but that’s not a dealbreaker!
It’s a fairly low-risk strategy (all options trading is risky!), that has a higher probability of success, but requires a higher amount of collateral.
So if you saw the most recent image above, I already STO (sold to open) 1 contract of the $90 Put for the October 31st expiration. I like to have a DTE (Days To Expiration) that is around ~45 days.
When the trade reaches 50% profit I will buy it back. I don’t like to be greedy and go for more profit, because I would rather not waste my time being in a trade for too long.
What About Alternative Trade Ideas?
- If the collateral requirement is too high, another idea is a put credit spread. You would sell a put at a strike below the current share price and then buy a put at a lower strike than the put you sold. By doing so, you will avoid the collateral requirement of a cash-secured put, but the credit received will be smaller. Also, if the trade goes sideways, you will not be assigned shares so no collecting dividends and running covered calls afterwards.
- Just invest! 1 share or even fractional shares are a way to get a foothold in a stock that you think might increase in value.
Completed Trades
Dino Silvestro
BTC for -30.96% profit
ATYR went down ~80% this morning due to a failed drug trail. I chose to exit this position early because I decided it would be better to lose a little bit, rather than wait for assignment and take the entire premium I received and then try to recover and possibly make a profit later with covered calls. It just didn’t seem worth it for a trade I was already skeptical of.
It’s a shame, because the stock was up something like ~17% on Friday and if the volume was there I probably could have exited with my usual 50%+ profit. But that’s ok, losses happen! The lesson to learn I think is to stick with better stocks (I’m not even sure how it ended up on my scanner in the first place). Because, like I mention in the “What’s the Trade?” section, getting assigned is usually fine because you get to keep the entire premium and then run covered calls on a stock that is possibly undervalued, so it should eventually recover. But an 80% drop was just too far below my strike and I didn’t want to waste more time on it.
Wait…Where Are the Candlesticks? And All the Other Indicators?
I know many traders love their candlesticks and a ton of indicators. I prefer simplicity. Candlesticks aren’t necessary unless you’re the kind of trader that wants to try and pick the perfect moment to execute a trade, and even then it’s not a sure thing.
As for indicators, there are a ton. Some of them work sometimes. None are perfect. I don’t want to get bogged down with too many. You’ll drive yourself crazy looking at too many of them, so find a handful you like and stick with those.
Disclosures
- I currently have an open trade with HOOD (as mentioned in this post).
- No trade is a sure thing. There is always risk involved.
- This blog post is not meant to take the place of financial advice, but hopefully acts as a guide for learning or informational purposes.