Weekend Trader

Weekend Trader Series

December 8, 2024

Open Positions Update

  • Close the Toast (TOST) January 17, 2025, 40-strike call on Monday, December 9, 2024. Close the position at a limit price within the range of the current market price when you place the order.

The following is this week's recommendation:


 Robinhood Markets (HOOD)

Place a limit order to buy the Robinhood Markets (HOOD) February 21, 2025 38-strike call at a limit price within range of the current market asked price when you place your order. At the close on Friday, December 6, this option was offered at $7.45. HOOD closed at $41.67 on Friday, December 6.

Do not attempt to enter this position after Monday's close.

Please use the following guidelines to manage the position:
  • Exit the position if the option is at a 100% gain from your entry price.
  • If the option has not reached its target profit by 3:00 p.m. Eastern time on Monday, December 30, close the position.
  • If there is a change to the above closeout parameters, we will notify you in your regular Sunday evening communication.

Shares of trading platform Robinhood Markets (HOOD) hit a new 52-week high this past week. The stock pushed above $37, the site of a 38.2% Fibonacci retracement of its 2021 post-initial public offering (IPO) high and 2022 lows. In November the equity attempted to push above $38 and failed. With the shares now above this level after a pause here, now is the time to initiate a call trade with the underlying above this resistance level.

 

Currently seven covering brokerage firms that are following the stock still sport a tepid "hold" or "strong sell," meaning there is plenty of room for upgrades, should this bearish sentiment begin to unwind. There has also been a decent mix of call and put additions the past few days, suggesting there is nothing euphoric left in the options market, in relation to the move above the aforementioned resistance levels.
 
Our recommended February 38 call has a leverage ratio of 3.8 and will double on an 26.7% rise in the underlying security.
 

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