Unusual Options Activity: Robinhood Markets (HOOD)

Investment platform Robinhood Markets (HOOD) is flat over the past year. Trading volume remains well off the prior bull market peak. However, one trader does see shares heading higher through the end of the year.

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  • That’s based on the December 29 $13 calls. With 22 days until expiration, 3,711 contracts traded compared to a prior open interest of 133, for a 28-fold rise in volume on the trade. The buyer of the calls paid $0.24 to make the bullish bet.

    Robinhood recently traded for about $10.50, so shares would need to rise $2.50, or just under 25 percent for the option to move in-the-money. The strike price is right near the stock’s 52-week high of $13.23.

    Robinhood has been in an uptrend recently. The company isn’t yet profitable, but revenues are up nearly 30 percent compared to a year ago, as investors have started to trade more actively in the markets following the 2022 bear market.

    Action to take: Shares have been trending higher, and make sense as a momentum trade. Investors may want to wait for a down day for shares before buying or adding onto a stake.

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  • For traders, the December 29 calls have little time to play out and are pricing in a big move higher. But they’re inexpensive, and could see high double-digit gains even if the trade doesn’t move in-the-money.

     

    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.