The options market bets Robinhood's stock is in for another week of wild trading

Published Fri, Aug 6 20211:38 PM EDTUpdated Fri, Aug 6 20214:09 PM EDT

Robinhood 's stock experienced a crazy week and the options market is signaling swings north of 30% through next week. Combinations of calls and puts at the $57 per share strike price for Aug. 13th expiration are trading at $18.20 per share, which implies a move of 32% in either direction by next Friday, according to options trader Jon Najarian, co-founder of MarketRebellion.com. Wednesday marked the first day options could be traded in HOOD's stock following its debut on the Nasdaq last week. Robinhood immediately became one of the most actively traded single-stock options, according to Michael Khouw, president of Optimize Advisors. "The options market is forecasting a pretty volatile road ahead over the next couple weeks," said Khouw. Shares of Robinhood popped nearly 8% on Friday . The trading platform reiterated that it is not selling any more stock, following Thursday's news that existing shareholders will sell up to 97.9 million shares over time . That development knocked the stock down by 27% on Thursday. The stock trading app also clarified Friday morning that these sales would not start right away, easing concerns about an immediate jump in stock supply that could weigh down the shares. Robinhood also had a 50% rally on Wednesday, which appeared to have been driven by retail investors. Khouw said Robinhood's strike calls were the 10th most active single-stock option on Wednesday. He said there were some institutional trades, but the average trade size of the most active contracts (three contracts) suggests the bulk of the volume is retail/self-directed. "I actually find this to be one of the most fascinating IPOs to come along throughout the course of my career," Josh Brown, co-founder and CEO of Ritholtz Wealth Management, said on CNBC's " Halftime Report " on Thursday. "If you told me this stock would end the week at $30, I would believe you. If you told me it's going to end the week at $120, I would believe you. You could convince me of either outcome and there doesn't even have to be a reason for that." Ironically, Robinhood paved the way for many retail investors who trade options and on margin. Trading on margin involves borrowing from your brokerage to purchase stocks. Options trading accounted for about 38% of Robinhood's first-quarter revenue. "It's a big step up to go from cash investing to buying options and buying stock on margin or shorting stocks," former Securities and Exchange Commission Chair Jay Clayton told CNBC's " Squawk Box " on Friday. "You have to have a much better understanding of the short-term market movements and how costly they can be."

Baiju Bhatt and Vlad Tenev pose in Times Square on Robinhood Markets IPO Listing Day on July 29, 2021 in New York City.

Cindy Ord | Getty Images

Robinhood's stock experienced a crazy week and the options market is signaling swings north of 30% through next week.