Established Covered Calls in Robinhood Markets Inc.

At 3:43pm ET this afternoon, my short-term Covered Calls net debit limit order position was executed for Robinhood Markets Inc. (ticker HOOD). Five hundred shares were purchased at $39.95 and five April 17th, 2025 Call options were simultaneously sold at the $33.00 strike price at $7.63 per share.  So, the buy/write net debit amount specified at $32.32 per share provides a $.68 per share time value profit potential for this position.  

As detailed below, a potential return-on-investment result is +2.1% absolute return-on-investment (equivalent to +108.6% annualized return-on-investment for the next 7 days) if the Robinhood share price is in-the-money (i.e. above the $33.00 strike price) and therefore assigned on its April 17th, 2025 options expiration date.  The probability this outcome will be achieved was 79.7% when this position was established.  

Robinhood is a $37 billion market cap company in the Investment Banking and Brokerage sub-industry within the Capital Markets industry.  It is the 5th largest company in that sub-industry behind Morgan Stanley, Goldman Sachs, Schwab, and Interactive Brokers.  Something that appeals to me about Robinhood is their highly fintech business model.  Their 47.8% net margin is substantially greater than the 23% to 30% net margin range of MS, GS, and Schwab and they dwarf the 8% of Interactive Brokers.  They are also growing rapidly having reported year-over-year stats recently such as: (1) +8% funded new customers; (2) +45% net new deposits; and (3) +58% assets under custody.  

As Covered Calls investors, we try to take advantage of temporary spikes in Implied Volatility by selling Calls against the stock purchased.  Because of the overall market decline and volatility that has spiked higher, the Implied Volatility of the Call options sold was an incredibly high 146.4 today when this position was established.  So, this position is a very risky one, but one in which selling this deep in-the-money $33.00 strike price serves to mitigate the risk while at the same time establishing the potential for a substantial return-on-investment if the stock price is above the $33.00 strike price on its April 17th options expiration date.  Also as I prefer, the next quarterly earnings reporting date is subsequent to the April 17th options expiration date.    

 
Robinhood Markets Inc. (HOOD) -- New Covered Calls Position

The buy/write net limit order transaction was executed as follows:
4/10/2025 Bought 500 Robinhood Markets shares at $39.95.

4/10/2025 Sold 5 HOOD 4/17/2025 $33.00 Call options @ $7.63 per share.  These deep-in-the-money $33.00 Calls were 17.4% in-the-money when this position was established.  

A possible overall performance result (including commissions) for this Robinhood Covered Calls position is as follows:
Covered Calls Net Investment: $16,163.35
= ($39.95 - $7.63) * 500 shares + $3.35 commission

Net Profit:
(a) Options Income: +$3,811.65
= ($7.63 * 500 shares) - $3.35 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If 500 Robinhood shares assigned at the $33.00 strike price at the options expiration): -$3,475.00
+($33.00 strike price - $39.95 stock purchase price) * 500 shares

Total Net Profit Potential: +$336.65
= (+$3,811.65 options income + $0.00 dividend income - $3,475.00 capital appreciation)

Potential Absolute Return-on-Investment: +2.1%
= +$336.65/$16,163.35
Potential Annualized Return-on-Investment: +108.6%
= (+$336.65/$16,163.35) * (365/7 days)