Placing an Options Trade
Robinhood empowers you to place your first options trade directly from your app.
There are many things to consider when choosing an option:
The premium (price) and percent change are listed on the right of the screen.
The break-even point is where the stock needs to trade at expiration for you to break even on your investment, taking into account the current value (premium) of the option.
You can place Good-til-Canceled or Good-for-Day orders on options. A Good-til-Canceled order remains open for 90 days until you cancel it, or it’s filled. A Good-for-Day order is automatically canceled at market close on the day it’s placed if it doesn’t execute.
Options don’t trade in the extended-hours session.
The “value” of the option is the number that we display on the top right corner of the options contract (e.g. $.35). This is the value we use to calculate your overall portfolio value on your home screen and in your graphs. This value is the option’s mark price. The mark price is the midpoint between the bid price and the ask price, and it’s used as the simplest way to help determine the value of an option.
If no buyers are currently available in the market, the mark price will display as $0.01.
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. At Robinhood Financial, if you’re given a Level 2 designation, you can execute the following options trades:
If you’re given a Level 3 designation, you can execute all of the above trades, along with the whole collection of fixed-risk spreads, including Iron Condors, Iron Butterflies, and Credit Spreads.
Just like stock trading, buying and selling 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.
You’re only allowed to make three day trades within a five-trading-day sliding window before being considered a pattern day trader.
You can’t use Gold Buying Power to purchase options.
You can’t trade options during the extended-hours session on Robinhood.
Options trading entails significant risk and is not appropriate for all investors. Certain complex options strategies carry additional risk. Robinhood Financial does not guarantee favorable investment outcomes and there is always the potential of losing money when you invest in securities, or other financial products. Investors should consider their investment objectives and risks carefully before investing. To learn more about the risks associated with options, please read the Characteristics and Risks of Standardized Options before you begin trading options. Supporting documentation for any claims, if applicable, will be furnished upon request.