Analysis of Robinhood's Volatility Trading Strategy
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 3 hours ago
0mins
Should l Buy HOOD?
Source: CNBC
- Volatility Trading Strategy: Robinhood's short strangle strategy, which involves selling out-of-the-money puts and calls, aims to capitalize on the stock remaining within a wide range before expiration, potentially benefiting from time decay amid elevated market volatility.
- Operational Leverage Impact: Despite a significant cooling in crypto trading activity in early October 2025, Robinhood's Q4 results revealed a meaningful year-over-year increase in operating expenses, rising from $458 million in Q4 2024 to $633 million in Q4 2025, indicating the company's choice to continue investing to maintain its position as a 'financial super app' during market fluctuations.
- Market Share and Growth Potential: Although Robinhood holds a relatively small share of the U.S. retail investable assets market, it possesses strong growth potential, particularly by transitioning younger users to more products, which could lead to steady compound growth as their assets increase.
- Investor Sentiment and Expectations: HOOD's stock has declined approximately 52% since early October 2025, reflecting investor disappointment regarding the company's future performance; however, Robinhood reported record net deposits for 2025 and preliminary January 2026 net deposits that were up year-over-year, albeit slightly below expectations.
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Analyst Views on HOOD
Wall Street analysts forecast HOOD stock price to rise
20 Analyst Rating
16 Buy
4 Hold
0 Sell
Strong Buy
Current: 75.970
Low
130.00
Averages
156.24
High
181.00
Current: 75.970
Low
130.00
Averages
156.24
High
181.00
About HOOD
Robinhood Markets, Inc. is creating a financial services platform for everyone, regardless of their wealth, income, or background. It uses technology to provide access to the financial system. Its offerings include Brokerage, Robinhood Crypto, Custody, Robinhood Wallet, Robinhood Gold, and Robinhood Gold Card. Its Brokerage services include investing, options trading, fractional trading, recurring investment, access to investing on margin, fully paid securities lending, cash sweep, instant withdrawals, Robinhood retirement, 24-hour market, joint investing accounts, and event contracts. It also offers a variety of ways for its customers to grow their financial knowledge, including Robinhood Learn, In-App Education, Newsfeeds, Sherwood Snacks, and Crypto Learn and Earn. Its self-clearing system, order routing system, data platform, and other back-end infrastructure deliver the capabilities that allow its customers to focus on investing, saving and spending.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Net Deposit Growth: Net deposits totaled nearly $16 billion in Q4, representing a 19% annualized growth rate relative to total platform assets from the previous quarter, indicating sustained customer trust and inflow of assets, enhancing future revenue potential.
- Deepening Customer Relationships: The report highlighted a 57% year-over-year increase in retirement accounts opened, demonstrating significant progress in building long-term customer relationships, which will lay the groundwork for future revenue growth.
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- Earnings Performance: Robinhood reported a 27% year-over-year revenue increase in Q4, slightly missing estimates, which led to a sharp stock sell-off, reflecting market sensitivity to high growth expectations and potentially impacting investor confidence in the short term.
- Net Deposit Growth: Net deposits totaled nearly $16 billion in Q4, representing a 19% annualized growth rate relative to total platform assets from the previous quarter, indicating sustained customer trust and inflow of assets, enhancing future revenue potential.
- Deepening Customer Relationships: The report highlighted a 57% year-over-year increase in retirement accounts opened, demonstrating significant progress in building long-term customer relationships, which will lay the groundwork for future revenue growth.
- Investment Opportunity: Despite the revenue miss, the ongoing growth in customer assets and the rollout of new banking services provide strong support for Robinhood's future development, suggesting that the current stock dip may present a buying opportunity for investors.
See More
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Announcement of IPO: Robinhood Ventures Fund I (RVI) has announced the launch of its initial public offering (IPO).
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See More
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- Significant Revenue Growth: Robinhood's revenue surged from $1.4 billion in 2022 to $4.5 billion in 2025, achieving a compound annual growth rate of 66%, indicating substantial success in attracting retail investors and solidifying its market position.
- Profitability Improvement: Robinhood turned profitable in 2024, with net income rising 33% to $1.9 billion in 2025, demonstrating the sustainability and profitability potential of its business model, which is expected to continue attracting investor interest.
- Gold Subscription Platform Expansion: By the end of 2025, Robinhood's Gold subscription platform served 4.2 million customers, driving user base growth and laying the groundwork for future revenue increases, with expectations of enhanced customer loyalty.
- HODU ETF Risks and Rewards: Direxion's HODU ETF aims to double Robinhood's daily returns; however, its structure is better suited for short-term traders due to high fees and volatility, prompting long-term investors to exercise caution, especially in unstable market conditions.
See More
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- IPO Announcement: Robinhood Ventures Fund I is set to IPO on the New York Stock Exchange under the ticker RVI, with an expected share price of $25, aiming to provide everyday investors access to private markets and address longstanding inequities in capital markets.
- Diverse Portfolio: The fund will invest in a concentrated portfolio of private companies, including Airwallex, Boom, and Databricks, with plans to add more companies over time, thereby enhancing investment options for investors seeking exposure to high-growth private firms.
- Optimized Fee Structure: RVI will reduce its management fee to 1.00% for the first six months post-IPO, reverting to 2.00% thereafter, with no performance fees, which will lower costs for investors and increase the fund's attractiveness to a broader audience.
- Enhanced Market Access: Designed as a closed-end fund with no accreditation requirements and no minimum investment, RVI offers daily liquidity, aiming to expand access for retail investors to private markets, catering to the growing demand for investment opportunities.
See More
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- High-Income Consumer Reinvestment: Analyst Ohsung Kwon noted that additional savings from tax refunds will flow back into equities, particularly among high-income consumers, significantly enhancing their investment willingness and suggesting a return of the 'YOLO' investment strategy.
- Bitcoin as a Liquidity Proxy: Analysts indicated that bitcoin can serve as a proxy for liquidity, signaling shifts in investment patterns; despite a $105 billion decline in domestic liquidity over the past four weeks, bitcoin has pulled back approximately 29%.
- Stock Performance Expectations: Wells Fargo identified over two dozen stocks likely to outperform during tax season, including Robinhood and Boeing, the latter seeing a 32% increase in share price over the past year and delivering 46 airplanes in January, marking the third highest for that month in the company's history.
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