Spotted a high-probability reversal setup on Robinhood Markets Inc (HOOD) and entered a 10-delta call credit spread with defined risk and a favorable risk/reward profile.
The setup showed early signs of an Evening Star pattern forming — one of the three reversal signals I track for tactical spread entries.
Setup Selection
Started by scanning extended names with signs of exhaustion — top three candidates on Friday, July 18 were NVDA, COIN, and HOOD. All were trading well above recent ranges with technical overextension on the daily chart.
From there, the focus shifted to structuring call credit spreads using similar capital allocation across all candidates.
Why 10-Delta Call Spreads?
This setup involves selling a far out-of-the-money call option (with delta around 0.10) and buying a further out-of-the-money call to limit risk.
The idea: profit from the price staying below the short strike — with a defined-risk, premium-collection structure.
It’s not about calling a top — just leaning into probability and premium decay when conditions align.
Comparative Analysis
Built a Google Sheets model to evaluate credit spreads across NVDA, COIN, and HOOD — all structured with the same maximum risk.
Each setup was assessed on:
Strike placement (short leg and long leg)
Credit collected per contract
Width of the spread
Maximum loss and maximum profit
Risk/reward ratio
Total projected profit at full size
📌 HOOD Aug 1st 130/135 spread stood out with the cleanest profile:
Credit received: $0.54
Max profit: $756
Risk/reward: 12.11%
Trade Executed
Position was opened late Friday, July 18.
Full structure and simulation available here:
👉 View the trade
Exit Plan
No intention to hold until expiration unless needed.
If HOOD stays below resistance and most of the premium gets captured early — the position will be closed before August 1.
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Disclaimer
All content is for informational purposes only and does not constitute financial advice.Any trades or strategies should be tested in a simulated environment before use.Trading involves risk, and all decisions are the sole responsibility of the reader.