Stop market order for options | Robinhood

Stop market order for options

A stop market order, also known as a stop-loss, triggers a market order if the option price falls to your stop price. You can use this order type to manage your risk exposure, maintain disciplined exit strategies, and auto-respond to sudden market shifts.

The difference between a stop market and a stop-limit appears when the option price hits the stop. With a stop market, the order becomes a market order. With a stop-limit, the order becomes a limit order. The implications of becoming a market order versus a limit order can be significant.

Sell stop market order

The stop price of a sell order needs to be below the current market price. Otherwise, it would immediately trigger and become a market order.

Note
  • Stop market orders can’t be entered from 9:30-9:45 AM, but previously entered GTC (Good-til-Canceled) orders can execute during that time. They can only be entered from 9:45 AM–4 PM ET (or 4:15 PM ET for late close options) due to increased volatility at market open.
  • Stop market orders for options are only available for sell to close orders.

Disclosures

Elevated volatility can affect most order types, but can be especially impactful on market or stop market orders. Market orders are filled at ‘the next available price’, thus between the time the order is entered and executed, volatility may have caused the price to rapidly get to a level that was not anticipated. Since the market order must be executed at the potentially disadvantageous price, this can lead to reduced gains or increased losses compared to what was expected when the order was entered.

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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). The Robinhood Money spending account is offered through Robinhood Money, LLC (“RHY”) (NMLS ID: 1990968), a licensed money transmitter. 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. RHF, RHY, RHC and RHS are affiliated entities and wholly owned subsidiaries of Robinhood Markets, Inc. RHF, RHY, RHC and RHS are not banks. Securities products offered by RHF are not FDIC insured and involve risk, including possible loss of principal. Cryptocurrencies held in RHC accounts are not covered by FDIC or SIPC protections and are not regulated by FINRA. RHY products are not subject to SIPC coverage but funds held in the Robinhood Money 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.

© 2024 Robinhood. All rights reserved.