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Robinhood (HOOD) is exactly the kind of underlying where selling volatility can make more sense than trying to predict the next headline-driven price swing — especially after a sharp pullback and with implied volatility still elevated. A short strangle — selling an out-of-the-money put and an out-of-the-money call in the same expiration — is fundamentally a bet that the stock will stay within a wide range through expiration, and/or implied volatility is overpriced versus what the stock ultimately realizes, so the combination of time decay and IV reverting to the mean may provide a tailwind. Crypto/options trading activity cooled materially after the market rolled over in early October 2025, and Robinhood’s Q4 results reflected that slowdown. That matters because HOOD remains operationally leveraged to “animal spirits.” When crypto is booming, volumes surge, and the stock can gap higher; when crypto cools, the opposite happens. There’s also some evidence that cost discipline is loosening a bit. Operating expenses were up meaningfully year-over-year in Q4 from $458 million for the quarter ended Dec. 31, 2024, to $633 million for the quarter ended Dec. 31, 2025. Robinhood appears to be choosing to continue to invest through the cycle, most likely to maintain its position as the “financial super app.” Even with crypto cooling, retail trading strength elsewhere is holding up: Transaction-based revenue was supported by strong equity and options activity. Robinhood reported record net deposits for 2025, including a large Q4 contribution, and also disclosed preliminary January 2026 net deposits that were up year-over-year, although perhaps a little light of expectations. Despite its rapid growth, the total addressable market remains substantial relative to Robinhood’s market share. Not only does Robinhood have a small share of U.S. retail investable assets relative to large peers, but its runway is also strong if the company continues to graduate its younger users to more products as their assets grow. Put differently, while crypto is soft right now, the company can still steadily compound its business with next-gen users. HOOD has already priced in significant disappointment, declining ~52% since the early October 2025 highs, a decline even larger than the ~45.5% decline in bitcoin over the same period. This is one reason IV is elevated. It’s also likely investors are waiting for clearer data. The company is expected to report Q1 2026 earnings on April 30. Strangle selling generally comes down to structure and exits, not specific predictions, by trying to capitalize on relatively wide ranges and avoiding near term catalysts, balancing theta (the rate of options decay), breakevens and “gamma”. Near-dated options have very high theta, which is beneficial for a strangle seller, but they tend to have tighter breakevens and gamma, which is less beneficial. Therefore, one should use expirations when theta is meaningful, but there is still time to adjust. Expirations of more than 30 days resolve the breakevens, while expirations should be shorter-dated than the next anticipated earnings in late April. Also, when selling strangles, look for opportunities to close short options early as decay and stock price movement take effect. Monitor the remaining yield, and perhaps consider a simple rule. For example, if a short option has lost 80% of its value, roll or take profits. The strangle example below, in the worst cases, would get long HOOD at a 26% discount to the current stock price, or short at 37% premium — net of the > $4.30 in premium collected — at expiration, although, as mentioned, presumably the position would be closed or adjusted well before then. DISCLOSURES: None. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
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