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This Robinhood Trade Stands To Pay Off With A Nearly 40% Return

Robinhood Markets (captured) The stock business had an excellent performance in 2025, and the chart continues to look strong.

The online trading platform’s price is up 289% so far in 2025, and there’s a way to bet that the stock will remain strong between now and early next year.

Long term bull put spread

When it comes to options, we usually look at short-term trades. Anywhere from one week to one month. Now, we will look at the long-term bull spread.

Longer term option trades tend to move a little slower than shorter term trades. This allows more time to adjust or close, but also means a lower annual return.

As a reminder, the Bull Put spread is a defined risk strategy, so always know the worst case scenario in advance. This type of trade will benefit if Robinhood shares are trading sideways or higher and even sometimes if they are trading slightly lower.

Potential premium

With Robinhood shares trading at around 145, if we use the March 20 expiry, we can sell 110 PUT and buy 105 to set up a Bull Put spread. This spread is trading around $1.40.

Selling this spread would generate approximately $140 with a maximum risk amount of $360.

If the spread expires, it would be a 38.9% return in five months provided Robinhood shares are above 110 at expiration. This seems like a very reasonable bet to me.

The 110 strike has a delta of 20, which means it has an approximately 80% chance of expiring worthless.

The maximum loss would occur if Robinhood shares closed below 105 on March 21 which would see the blue chip seller lose $360 on the trade.

The break-even point for the trade is 108.60, which is calculated as 110 less the option premium of $1.40 per contract.

It is ideal to set up a set point or stop loss if Robinhood drops below 120. Otherwise, another good rule is to limit the loss on the premium amount received which in this case means you will take a break if the spread starts trading around 2.80.

Also, sticking to this loss level will help avoid major losses if the trade goes south.

Robinul classifications in IBD

Currently, Investor’s Daily Business gives Robinhood shares Composite classification Out of 98 of the top 99, Earnings per share rating From 80, and Relative strength rating From 98. IBD Stock Screeningranked first in its group.

Please remember that options are risky, and investors can lose 100% of their investment.

This article is intended for educational purposes only and is not a commercial recommendation. Always remember to do your due diligence and consult your financial advisor before making any investment decisions.

Gavin McMaster has an MSc in Applied finance and Investment. He specializes in income trading using options, and is conservative in his style. He also believes that patience in waiting for the best settings is the key to successful trading. Follow him on X/Twitter at eptiontradiniq.

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2025-10-08 17:04:00

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