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The wheel on HOOD: a rich premium on a stock that swings hard

Robinhood's stock moves with how busy its customers are. When trading and crypto are hot, it climbs. When they cool, it can fall fast. That's what the rich premium on a HOOD put is paying you for.

Options guide · 8-minute read · Updated 2026-10-28

The short answer

You can run the wheel strategy on HOOD like any stock. Sell a Cash-secured put, get assigned if it falls, then sell calls on the shares.

The premium is large because HOOD is a high-volatility stock. The market expects big moves, and big moves are the risk. The hard case isn't one bad month. It's an assignment that keeps falling while the calls pay less and less.

This isn't a recommendation to buy or sell Robinhood stock.

What HOOD is like for the wheel

HOOD is the ticker for Robinhood Markets, the trading app company. It listed on the Nasdaq in July 2021.

• Its business moves with market mood. Much of its revenue comes from customer trading, including options and crypto. Busy markets help it. Quiet ones hurt.
• It swings hard both ways. After its 2021 debut, it fell more than 80% from its high by mid-2022. It later climbed far above its debut price. That kind of range is what the high Implied volatility is pricing in.
• Earnings four times a year. It reports after the close. The stock often gaps the next morning. Check the date on Robinhood's investor site before each trade.
• Don't lean on a dividend. Nothing in the math on this page assumes one, and you shouldn't either. Check the investor site for any payout or split before you trade.
• Liquid options. HOOD has Weekly options and busy strikes near the price. Spreads on far-out strikes can still be wide, so check the chain.

Wheeling HOOD and using the Robinhood app are two different things. You can do either without the other. For the app itself, see selling options on Robinhood.

What one contract ties up

One put needs the strike times 100 in cash. A $90 strike needs $9,000. That's the stock you'll own if you're assigned.

Before you look at the premium, ask the harder question: what does a 30% drop cost you? On a $90 strike that's about $2,700 on the shares. Our cash-per-stock table shows how that scales by price band.

Every outcome for the first put (an illustration, not a trade idea)

These numbers are for a made-up fintech stock, XYZ. They are not HOOD's prices.

XYZ trades at $100. You sell a 30-day $90 put for $5.00. You collect $500. Your broker sets aside $9,000. Earnings land inside the trade.

The premium is rich, but it covers only the first $5 of a fall. Below $85, every dollar is yours to lose.

An assignment that keeps falling

Month 1. Earnings disappoint. XYZ gaps to $70. You're assigned 100 shares at $90.

Month 2. You sell a $90 call at your cost. It's far above the stock, so it pays $0.50 ($50). XYZ slides to $62. The call expires.

Month 3. You still won't sell below your cost, so you sell a $90 call again. It pays $0.20 ($20). XYZ falls to $55. The call expires.

Three months in, you collected $570 and you're down $2,930. Your cost after premiums is $90 − $5.70 = $84.30 a share. From $55, XYZ has to rise more than 50% to get you back to even.

This is the wheel's hardest spot. The calls at your cost pay almost nothing. The calls that pay well are below your cost and would lock in the loss. My guide to being assigned while the stock keeps falling walks through the choices.

The choices from here

None of these is a win. The best one depends on whether you still want to own the company. If the reason you sold the put is gone, holding on is just hoping.

The rule for next time

1. Before you sell a put on a high-swing stock, write down the 30% drop in dollars.
2. Check whether earnings fall before your expiry.
3. Only sell the put if you'd want the shares at the strike, even after a gap.
4. Decide now the lowest call strike you'd ever accept.

Questions