Options Trading Recap: SOUN and HOOD Trades

 On January 6, 2025, I executed three options trades involving SoundHound AI Inc. (SOUN) and Robinhood Markets Inc. (HOOD). Let's break down these trades and their outcomes.

SoundHound AI (SOUN) Trades

1. SOUN $24 Call (Expiration: 1/10/2025)

• Action: Sold call option
• Premium received: $96
• Outcome: Expired worthless, full premium captured

This trade worked out in my favor. The call option expired out of the money, allowing me to keep the entire premium without any obligation. This call was based on my previous put assignment 

2. SOUN $21 Put (Expiration: 1/10/2025)

• Action: Sold put option
• Premium received: $80
• Outcome: Assigned at $21, with share price at $14.09

This trade didn't go as planned. The significant drop in SOUN's share price led to assignment, resulting in a substantial loss. The total loss on this trade, accounting for the premium received, was $611.

Robinhood Markets (HOOD) Trade

3. HOOD $41 Put (Expiration: 1/10/2025)

• Action: Sold put option
• Premium received: $50
• Outcome: Assigned at $41, with share price at $40.08

This trade also resulted in assignment, but with a much smaller loss. After accounting for the premium received, the net loss on this trade was $42.This is one i was hoping to capture at lower prices.

Trade Analysis

My total premium income from these trades was $226. However, the losses from the assigned puts outweighed this income, resulting in a net loss of $427.The SOUN call option strategy worked well, but the put options on both SOUN and HOOD exposed me to downside risk that materialized. The significant drop in SOUN's share price was particularly impactful.

Looking Forward

As I move forward, it's crucial to reassess my risk management strategies, especially when selling put options on volatile stocks like SOUN. Recent news suggests that SOUN has been experiencing significant price movements, with a 63.12% increase in just one week prior to my trades. This volatility, while potentially profitable, also carries substantial risk.Additionally, insider selling activity at SOUN might be a signal to watch closely in future trades. As always, thorough research and careful consideration of market conditions are essential for successful options trading.Remember, options trading carries inherent risks, and past performance doesn't guarantee future results. Always conduct your own due diligence and consider your risk tolerance before entering any trades.