Placing an Options Trade
Robinhood empowers you to place your first options trade directly from your app.
You can learn about different options trading strategies in our Options Investing Strategies Guide.
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 the 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 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 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 create levels of options trading that determine who can execute specific strategies, depending primarily on your experience trading options and the complexity of the strategy. Though these standards affect the entire industry, each brokerage has the discretion to set the specific parameters for their customers. At Robinhood, 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.
Options on Robinhood behave like high-volatility stocks, which means that you can’t use Gold Buying Power to purchase them.
Options don’t trade during the extended-hours session on Robinhood.