Placing an Options Trade

Robinhood empowers you to place your first options trade directly from your app.

Placing an Options Trade

  1. Tap the magnifying glass in the top right corner of your home page.
  2. Search the stock you’d like to trade options for.
  3. Tap the name of the stock you’re looking for.
  4. Tap Trade in the bottom right corner of the stock’s Detail page.
  5. Tap Trade Options.

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

option-2

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 mark price (see below).
      • The +/- % change is today’s cost movement for the contract.
  • 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.

  • The break-even percentage is the amount the underlying security needs to move between now and expiration for you to break even on your investment if you’ve chosen the “buy” strategy.
  • The chance of profit percentage is the probability your investment will be profitable if you’ve chosen the “sell” strategy. We use the Black Scholes model to help determine the probability of your investment’s profitability.

Good-til-Canceled versus Good-for-Day Orders

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.

Keep in mind

Options don’t trade in the extended-hours session.

Options Valuations and Mark Price

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.

Note

If no buyers are currently available in the market, the mark price will display as $0.01.

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. At Robinhood Financial, if you’re given a Level 2 designation, you can execute the following options trades:

  • Long Calls, Long Puts
  • Covered Calls
  • Cash-Covered Puts

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.

Day Trades

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.

Keep in mind

You’re only allowed to make three day trades within a five-trading-day sliding window before being considered a pattern day trader.

Gold Buying Power

You can’t use Gold Buying Power to purchase options.

Extended-Hours Trading

You can’t trade options during the extended-hours session on Robinhood.

Disclosures

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.

Reference No. 1389875
Still have questions? Contact Robinhood Support
Can’t find what you’re looking for? Contact Robinhood Support
The 3-minute newsletter with fresh takes on the financial news you need to start your day.
The 3-minute newsletter with fresh takes on the financial news you need to start your day.


© 2020 Robinhood. All rights reserved.

Robinhood means Robinhood Markets and its in-application and web experiences with its family of wholly owned subsidiaries which includes Robinhood Financial, Robinhood Securities, and Robinhood Crypto.

All investments involve risk and loss of capital.

Securities trading is offered to self-directed customers by Robinhood Financial. Robinhood Financial is a member of the Financial Industry Regulatory Authority (FINRA).