Will Robinhood Be My Next Big Win? Exploring a High-Potential Covered Call Opportunity

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Imagine earning weekly income from your investments without obsessing over stock prices. That’s the promise of covered calls—an investment strategy ideal for generating passive income and enhancing retirement income. If you're someone who’s been searching for a smarter way to grow your portfolio, the recent price action of Robinhood (HOOD) may be just the opportunity you’ve been waiting for.

In this post, we’ll explore how covered calls can be used with Robinhood stock to create consistent, reliable income—just like rent from a property. Even more interesting, we’ll look at Mark Yegge’s strategic approach and explain why this stock, despite its low price, might be a hidden gem for income-focused investors.

What Are Covered Calls?

Covered calls involve owning shares of a stock and selling call options on those shares. You give someone else the right (but not the obligation) to buy your shares at a set price (the strike price) within a certain period of time. In exchange, you get paid a premium, which is your income.

This strategy is popular among those looking for passive income or a steady stream of cash from their portfolios. Instead of simply waiting for a stock to appreciate, you collect regular "rent" while you hold it.

Why Robinhood Stock Stands Out

Mark Yegge, the founder of the Cash Flow Machine, usually avoids stocks under $100. But Robinhood (ticker: HOOD) caught his attention—and for good reason.

Here's why:

Strong Momentum: The stock has nearly doubled from its April lows, showing a strong short-term uptrend.
Positive Earnings Beat: In Q1 2025, HOOD reported revenue of $927M, beating analyst expectations of $917M.
Profit Margins: Net margins stand at a robust 47.81%.
Crypto Expansion: Acquiring WonderFi, a Canadian crypto platform, positions Robinhood for further growth in the booming crypto space.
Tech Enhancements: New initiatives like its “Legend” desktop platform and AI customer service tool, “Cortex,” aim to improve user experience.

On the chart, Robinhood shows a constructive setup, forming a long “cup” pattern. A breakout above $66 could push it toward its previous high of $84, last seen after its IPO.

Executing a Covered Call Strategy on Robinhood

At the time of analysis, Robinhood traded around $61.67. Mark suggests a slightly in-the-money covered call using the $61 strike, which provides both premium income and a modest downside cushion.

Let’s break down how this works:

Buy 1,000 shares at $61.67 = $61,670
Sell 10 call options with a $61 strike, expiring in one week

Each contract pays $1.78 in premium = $1,780 total

Intrinsic value (already in-the-money): $0.67 per share
Extrinsic value (juice): ~$1.11 per share

This trade targets 2.9% return in just one week, or nearly 149% annually if repeated consistently (though market conditions will vary).

Why This Strategy Works

Mark emphasizes this strategy isn’t about guessing where the stock will go—it’s about consistent income:

“We’re not in it for the capital gains. We’re in it for the juice.”

That juice, also known as extrinsic value, is the time premium that disappears as the option nears expiration. If you sell options weekly, you can collect this “rent” over and over again, much like a landlord collects from tenants.

What Happens If the Stock Moves?

Let’s cover two common scenarios:

The Stock Goes Up

If HOOD rises to $65 or even $100, you won’t profit from the stock’s appreciation beyond the strike price. But that’s okay—you’ve already collected your full premium, plus any intrinsic gain.

The Stock Goes Down

You’re protected down to $59.20 (the purchase price minus the $2.52 premium). If the stock falls below this, you start to lose money—just like any other stock investor. But covered calls offer some cushion.

Rolling Options to Extend Your Income

Concerned about assignment?

Mark explains how he avoids this:

“Every Friday, I roll the calls. I buy them back cheap and sell new ones for the next week.”

This avoids the shares being called away while allowing him to repeat the income cycle.

Integrating Covered Calls into Retirement Planning

For retirees and near-retirees, covered calls offer a powerful tool to supplement pension or Social Security income. Instead of relying solely on dividends or bond yields, this strategy can help you generate 1–2% weekly on your invested capital—sometimes more.

Imagine turning a $100,000 portfolio into $1,000–$2,000 of monthly income. With discipline and the right stocks, it’s possible.

Best Practices for Using Covered Calls with Stocks Like HOOD

Choose Stocks in an Uptrend: Like Robinhood right now. It increases your odds of success.
Use Slightly In-the-Money Calls: It offers some downside protection while generating more income.
Focus on the Juice: You’re after the time premium—not capital gains.
Roll Weekly: Avoid assignment and capture the full juice again and again.
Understand Your Risk: Covered calls don’t protect against major drops.
Stay Diversified: Don’t put all your money in one stock, even if it looks promising.
Track Your Results: Brokerage P&L won’t reflect your true gains from covered calls. Keep your own records.
Ignore Analyst Price Targets: As Mark says, “You’re just as smart as they are.”
Look for High-Volume Stocks: Liquidity matters in options trading.
Avoid Emotional Decisions: Stick to the system, not your gut.

Frequently Asked Questions

Q1: What if the stock gets assigned?
A: If the stock closes above the strike, it may get assigned. That’s okay—you already collected full premium. You can buy the stock back and repeat.

Q2: What if the stock drops below the strike?
A: You’re protected by the premium collected. Below that, you experience losses like a regular shareholder. That’s why uptrending stocks are preferred.

Q3: Is Robinhood a good stock for beginners to try covered calls on?
A: Possibly. It’s affordable, liquid, and has decent premiums. But ensure you understand the risks and follow a strategy.

Get started today

Conclusion

Robinhood may not be a typical “super stock,” but its momentum, tech enhancements, and strong option premiums make it a compelling play for income-focused investors. With a solid strategy like Mark Yegge’s in-the-money covered calls, you could generate weekly cash flow, regardless of where the market moves.

If you're aiming for passive income, growing your retirement portfolio, or just want smarter strategies for investing, covered calls on Robinhood may be your next big win.

Will Robinhood Be My Next Big Win? Exploring a High-Potential Covered Call Opportunity

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