Not true...He has a 10 percent cushion ftom his purchsse price.That means if the stock goes to zero,He drops 90 percent. He capped his upside at 23 percent. So the next question is if he is wrong,does he become an investor or does he have a stop in place.. Im not judging the trade as I havent looked at the screen.Im only asking if 10 percent protection from his entry price is worth giving up all upside above 23 percent..
I can always buy back the option if HOOD goes south. Come March 23 (not too long from now), I can reevaluate the trade...
Regsrdless,you asked a very good question..Hes selling high vol,and if he is right,makes 23 percent in 4 months.His breakeven on the downside is 7.59...without looking at the screen,if I was bullish, I would probably sell a put to finance a call/call spread
Thats what you shoukd know before placing the trade.You know your mx profit.How much pain are you willing to take, or are you a happy buyer down 10 percent??
I look at things in a different way. If HOOD is at $8 come March 23, I'll be a happy camper. Write another covered call or sell...I've still won. If it drops, I'll buy it back to live another day... Here is a thread I did on Google a few weeks back...I really don't care if the stock drops 15%!! Good value and more options to write. https://www.elitetrader.com/et/threads/bought-100-shares-of-google-today.370619/
Wait...If it drops to $5. I bail. We are only talking less that $1,000. Just playing with it. I usually go for quality (think Schwab)...This is a flyer.
If even half this story is true, I should be OK...One never knows. Robinhood CEO Vlad Tenev reassured its investors that the company has minimal exposure to the downfall of FTX, a popular cryptocurrency exchange. "It’s business as usual at @RobinhoodApp," he tweeted on Nov. 10. Shareholders appeared to agree with Tenev's sentiment as shares jumped by 8.2% pre-market to trade at $9.09 and rose by over 6% after the market opened. Shares of the brokerage were trading at $11.72 on Nov. 8 when FTX first disclosed it would be acquired by Binance due to its liquidity issues, but closed at $9.80. The stock had fallen by as much as 15% throughout the day. Investors began selling off their holdings on Nov. 10 as Binance reversed course and said it would no longer acquire FTX due to initial discoveries made as the company conducted due diligence. Robinhood shares fell to $8.44. Sam Bankman-Fried, the founder of FTX, bought a 7.6% stake in May in Robinhood, a brokerage meant to attract millennial investors who sought to invest in cryptocurrencies. "Despite SBF having an equity stake in Robinhood, we have no direct exposure to Alameda, FTX, or any of its entities, and we've confirmed with our partners that they don't have material exposure either," Tenev tweeted. Crypto Trading Volume Rises Investors are still confident in the future of the valuation of cryptocurrencies as the number of buyers have risen to the highest level in Robinhood's history during the past couple of days, Tenev said. "In the past few days, we've been seeing elevated trading volumes and elevated crypto inflows," he tweeted. "In particular, the last couple of days have been our two biggest days of crypto inflows ever." In this "flight to safety", we're proud that customers are turning to Robinhood," he added. Investors have faced extreme volatility in Robinhood as shares fell by 28% during the past five days and plummeted to $7.05 on June 15 as the crypto market ran into severe liquidity issues. The massive decline in market capitalization of over $9 billion compared to January meant the valuation of the company was lowered in June to $5.9 billion, making Robinhood an ideal target for a takeover. Tenev seeks to maintain confidence in the future of the stock and crypto trading app. Robinhood Does Not Lend Crypto Unlike other brokerages, Robinhood does not lend out crypto to other investors or use it as leverage. "Simplicity is key here — we don't lend your crypto or leverage against it," he said. "We are also extremely selective about the assets we offer, and we intend to keep it that way." Tenev said the unregulated aspects of trading cryptocurrencies are problematic. FTX is headquartered in the Bahamas and was founded in 2019. "Over the past few years, as cryptocurrency has entered the mainstream, we've seen an explosion of new companies and new technologies, many of them offshore and unregulated," he said. The explosion in the types of crypto investments such as digital coins and various brokerages during the past few years means that investors need to be wary of where they choose to make their investments. "In fact, one of the things that has made crypto special is the fact that anyone with a laptop can contribute and create a meaningful new product," Tenev said. "However, this makes it doubly important for customers to do their due diligence into the platforms and products they use." Robinhood is headquartered in Menlo Park, California. "As a regulated US entity, we'll continue to do our part, working closely with regulators, to deliver the safest and most trusted crypto experience possible," he said.