Placing an options trade | Robinhood

Placing an options trade

Robinhood empowers you to place options trades within your Robinhood account.

Placing an options trade

  1. Search the stock or ETF you’d like to trade options on using the search bar (magnifying glass)
  2. Select the name of the stock or ETF
  3. Select Trade on the stock’s or ETF’s detail page
  4. Select Trade Options

You can learn about different options trading strategies by checking out Basic options strategies (Level 2) and Advanced options strategies (Level 3).

Note

If you have multiple accounts (such as an individual investing account and an IRA), make sure you've chosen the correct account before placing a trade.

Swipe to trade

For existing options positions or pending orders, you can swipe to take the following actions in the app:

  1. Go to Account (person icon), Retirement, or Options
  2. For an existing position:
  • Swipe right to buy or open it

  • Swipe left to sell or close it

    For a pending order:

  • Swipe right to cancel it

  • Swipe left to replace it

  1. If applicable, update the trade details and swipe up to submit

Things to consider when choosing an option

There are many things to consider when choosing an option:

  • The expiration date is displayed just below the strategy and underlying security. You can scroll right to see expirations further into the future.

  • The strike prices are listed high to low; and you can scroll up or down to see different strike prices.

  • The premium (price) and percent change are listed on the right of the screen.

    • What’s the price and percent change?
      • The value shown is the natural price (by default) or the mark price. Note that if there are no bids, the mark price will show as $0.01. See below for more details.
      • The +/- % change is today’s cost movement for the contract.
  • The break-even point is where the underlying security needs to trade at expiration for you to break even on your investment, taking into account the current value (premium) of the option.

  • The break-even percentage is the percentage change the underlying security would need to move for you to break even on the option at expiration.

  • The chance of profit percentage is the probability of making a profit at the option’s current mark price if held until expiration.

Keep in mind

Chance of profit is an estimate based on model assumptions and doesn't guarantee future results. Numerous factors that aren't reducible to a model determine the actual chance of profit for a particular option contract or strategy.

Good-til-canceled versus Good-for-day orders

You can place Good-til-canceled (GTC) or Good-for-day (GFD) orders on options. A GTC order remains open for 90 days until you cancel it, or it’s filled. A GFD order is automatically canceled at market close on the day it’s placed if it doesn’t execute.

Natural price versus mark price

You can view the price (and determine the theoretical value) of an options contract in the following ways:

  • Natural price is either the ask price (if you’re buying an option), or the bid price (if you’re selling an option)
  • Mark price is the midpoint between the ask price and the bid price, and is sometimes used for simplicity

As a reminder, the bid price is the highest price other traders in the market are willing to pay for an asset at a moment in time, and the ask price (also known as the offer) is the lowest price traders are willing to accept for an asset at a moment in time.

By default, the Natural price is shown when buying and selling options, but you can change it to show the Mark price instead on the web or in the app:

  • On the web, while placing a trade hover over the Price column title, select Edit (pencil icon), and then select Mark price.
  • In the app, while placing a trade select Edit (pencil icon), and then in Default price, select Mark price.

Regardless of your default setting, mark price will still be used for:

  • Multi-leg orders
  • Options rolling
  • Calculating current price, total return, and other information regarding contracts you currently hold (e.g. your portfolio return)
Note

If no buyers are currently available in the market, the mark price will show as $0.01 for single-leg positions.

Levels

We’re required to evaluate whether various levels of options strategies are appropriate for customers, based on information such as their trading experience, investment objectives, and financial situation. Each brokerage has the discretion to set the specific parameters for their customers.

With a Level 2 designation, you can execute options trades like: Long calls, Covered calls, and Long puts.

With a Level 3 designation, you can execute all of the above trades, along with limited risk spreads like: Credit spreads, Debit spreads, Iron condors, and Iron butterflies.

Day trades

Just like stock or ETF trading, buying and selling (or selling and buying) the same options contract on the same day will result in a day trade. It’s the same contract if the ticker symbol, strike price, expiration date, and type (call or put) are all the same.

Keep in mind

Because of pattern day trade restrictions, you’re generally limited to no more than 3 day trades in a 5 trading day period, unless you have at least $25,000 of portfolio value (minus any crypto positions) in your margin account at the end of the previous day.

If you have a cash account, you're not subject to pattern day trading restrictions, but you can't access certain features, like trading with unsettled funds.

Disclosures

Be aware of the risks listed in our Day Trading Risk Disclosure Statement and the FINRA Options investing Information.

Robinhood doesn’t promote day trading. Day trading can be extremely risky. Day trading is generally not appropriate for someone of limited resources, limited investing experience, and low risk tolerance.

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RHF, RHY, RHC, RCT, and RHS are affiliated entities and wholly owned subsidiaries of Robinhood Markets, Inc. RHF, RHY, RHC, RCT, and RHS are not banks. Products offered by RHF are not FDIC insured and involve risk, including possible loss of principal. RHC isn’t a member of FINRA and accounts are not FDIC insured or protected by SIPC.

RHY is not a member of FINRA, and products are not subject to SIPC protection, but funds held in the Robinhood spending account and Robinhood Cash Card account may be eligible for FDIC pass-through insurance (review the Robinhood Cash Card Agreement and the Robinhood Spending Account Agreement).

Options trading entails significant risk and is not appropriate for all customers. Customers must read and understand the Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount.

Commission-free trading of stocks, ETFs and options refers to $0 commissions for Robinhood Financial self-directed individual cash or margin brokerage accounts that trade U.S. listed securities and certain OTC securities electronically. Keep in mind, other fees such as trading (non-commission) fees, Gold subscription fees, wire transfer fees, and paper statement fees may apply to your brokerage account. Please see Robinhood Financial's Fee Schedule to learn more.

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All investing involves risk.

Brokerage services are offered through Robinhood Financial LLC, (“RHF”) a registered broker-dealer (member SIPC) and clearing services through Robinhood Securities, LLC, (“RHS”) a registered broker dealer (member SIPC). Cryptocurrency services are offered through Robinhood Crypto, LLC (“RHC”) (NMLS ID: 1702840). Review a list of RHC licenses for more information.The Robinhood Money spending account is offered through Robinhood Money, LLC (“RHY”) (NMLS ID: 1990968), a licensed money transmitter. Review a list of our licenses for more information. Credit card products are offered by Robinhood Credit, Inc. ("RCT") (NMLS ID: 1781911 and issued by Coastal Community Bank, Member FDIC, pursuant to a license from Visa U.S.A. Inc.

The Robinhood Cash Card is a prepaid card issued by Sutton Bank, Member FDIC, pursuant to a license from Mastercard® International Incorporated. Mastercard and the circles design are registered trademarks of Mastercard International Incorporated.

RHF, RHY, RHC, RCT, and RHS are affiliated entities and wholly owned subsidiaries of Robinhood Markets, Inc. RHF, RHY, RHC, RCT, and RHS are not banks. Products offered by RHF are not FDIC insured and involve risk, including possible loss of principal. RHC isn’t a member of FINRA and accounts are not FDIC insured or protected by SIPC.

RHY is not a member of FINRA, and products are not subject to SIPC protection, but funds held in the Robinhood spending account and Robinhood Cash Card account may be eligible for FDIC pass-through insurance (review the Robinhood Cash Card Agreement and the Robinhood Spending Account Agreement).

Options trading entails significant risk and is not appropriate for all customers. Customers must read and understand the Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount.

Commission-free trading of stocks, ETFs and options refers to $0 commissions for Robinhood Financial self-directed individual cash or margin brokerage accounts that trade U.S. listed securities and certain OTC securities electronically. Keep in mind, other fees such as trading (non-commission) fees, Gold subscription fees, wire transfer fees, and paper statement fees may apply to your brokerage account. Please see Robinhood Financial's Fee Schedule to learn more.

Robinhood, 85 Willow Road, Menlo Park, CA 94025.© 2024 Robinhood. All rights reserved.