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Traders, like me, are not psychic. They make decisions based on the information available to them. Quant firms have the luxury of having an army of MIT PhD students, crazy sophisticated infrastructure, a warehouse of alternative data sources, and the ability to execute strategies that retail investors couldn't dream of, such as High Frequency Trading (HFT).

As retail investors, we can only work with what we got. For most of us, that's technical indicators and fundamental indicators [video]. These indicators help us rationalize price movement and understand a company's underlying health.

Fundamental indicators, in particular, are extremely important for long-term investors and active traders. They help us decide if a company is healthy and worth parking our money in. For example, if a company is REALLY good at making a return on an investment, then that might be a better investment than a high-yields savings account (HYSA). Alternatively, if a company burns a bunch of money each year and isn't really growing, then that's a signal that it's not a solid investment.

Click HERE (or the picture below) for a real-world example of how understanding financial statements earned me 40% of my investment in 1 week!

The rest of the article will explain my thought process on entering a trade with Robinhood (HOOD) call options.

For context, Robinhood shares surged by 12% after hours on March 13th, 2023. I bought my call options before the huge jump. Here's why.

The first part of my decision-making process was based more on informal technical analysis. As a long-time trader, I noticed that Robinhood stock was doing really good year-to-date, and I wandered why. In my personal experience, stocks like this tend to have a lot of momentum. While other stocks like Intel (INTC) tend to have price action that is more mean-reverting, when a stock that hasn't moved a lot starts going up rapidly, there's usually a reason why. 

I used NexusTrade's AI chat and noticed that Robinhood had a profitable Q4. I then Googled information about Robinhood's earnings and saw that their revenue was increasing and they're aiming to deliver more profitable growth next year.

Want me to integrate news directly into NexusTrade and the AI Chat? Email me at nexustrade@starks-technology.com telling me that you would subscribe to NexusTrade Premium for this feature.

Finally, I noticed that HOOD's market cap was very low, especially when compared to a company like Coinbase (COIN).

As someone who actually trades cryptocurrency, the experience between trading on Robinhood and Coinbase is night and day. HOOD is FAR superior. The main reason for that are transaction fees. The fees to sell a currency like Ethereum (ETH) are astronomical on Coinbase. 

In comparison, Robinhood's fees are virtually nonexistent. Sure, there's a spread, but that exists on every brokerage (including Coinbase).

Finally, Robinhood does far more than just transactions with cryptocurrencies. Robinhood is a brokerage and a bank, with their own debit cards that they issue to users. They also have the option of doing Robinhood gold. Because of the strong momentum on Robinhood's stock price and their potential for future, profitable growth, I decided to enter a small position in 01/17/2025, 17c HOOD call options.

I have an entire options trading strategy that's too long to detail in this article. To put it briefly, I will be earning a (small) income on Robinhood. My calls are already above my strike price, so I can sell 1-2 calls per week using my in-the-money call as collateral.

My calls don't expire until next year, so I'm not worried about short-term price fluctuations. If my position does turn against me, I will wait until Hood's next earnings report to determine what I ought to do next. If the results are still good, then I will likely buy more.

This is a relatively advanced strategy and the full details are outside the scope of this article. Let me know if you want me to talk about this more thoroughly.

I was able to use a combination of technical and fundamental indicators to purchase Robinhood call options before a staggering 12% jump. I'm now using my Robinhood calls as collateral to earn a small weekly "dividend". This article demonstrates the power of NexusTrade in helping users perform financial research.

I know this article is different from what I tend to write, but I hope its helpful in understanding how I use NexusTrade and AI to automate the financial research process and improve my investing decisions.

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