Depending on the options strategy you use, you may have stocks or cash held as collateral to make sure you can cover the position in the case of assignment.
If collateral is held in stock:
- When Selling to Open a Covered Call:
- You must have 100 shares per contract of the underlying stock in your portfolio to cover the position. As long as the position is open, you won’t be able to sell 100 shares of the underlying stock.
If collateral is held in cash:
- When Selling to Open a Cash-Covered Put:
- We’ll set aside enough money from your portfolio to buy the underlying stock at the contract’s strike price.
- When opening a Credit Spread:
- We’ll put aside enough cash from your account to cover your maximum loss.
You’ll be able to see exactly what collateral is held on the Stock Detail page of the underlying stock. The Stock Detail page is the screen you’ll see when you tap on a stock in the app.
When you place an options order, we’ll hold the appropriate collateral (cash or stock) beginning at the pending state. The same way we’ll hold enough cash to fill your pending order when you open an equity position, we’ll hold enough cash or stocks to cover your option position until the order is cancelled.
Please Note: Options transactions may involve a high degree of risk. To learn more about the risks associated with options trading, please review the options disclosure disclosure document entitled the Characteristics and Risks of Standardized Options available through Robinhood Financial LLC or The Options Clearing Corporation.