How do I place an options trade?
To place an options trade:
- Tap the magnifying glass in the top right corner of your home page
- Search the stock you’d like to trade options for
- Tap the name of the stock you’re looking for
- Tap “Trade” in the bottom right corner of the Stock Detail page
- Tap “Trade Options”
You can learn more about different options trading strategies in our “What’s an Option?” article.
What should I consider when choosing an options contract?
There are many things to consider when choosing an option:
- The expiration date is displayed just below the strategy and underlying stock. 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 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.
- The break even percentage is the amount the underlying stock 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 determine the probability of your investment’s profitability.
Why don’t all stocks have options?
Not all stocks can have options because of certain regulatory standards. Some of these include:
- Stocks with low prices
- Stocks with low trading volumes
- Stocks with low market caps
Keep in mind, Robinhood does not support options trading on stocks we do not support. For a guide to eligible stocks on our platform, check out Available Securities on Robinhood.
Why can’t I place an options market order?
We’ve decided not to support market orders because the spreads on options contracts are typically much larger than stocks, and because options contracts have much less liquidity in the market. Placing limit orders will give your order a better chance of being executed at the price you want. This way, you’ll know how much you’re going to pay to buy a contract. You can place Good-til-Canceled or Good-for-Day orders.
What’s the difference between Good-til-Canceled and Good-for-Day orders?
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 does not execute. Keep in mind, options don’t trade in the after-hours session.
How does Robinhood value options?
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 the homescreen and in the 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.
Why are my orders receiving partial fills?
Your options order is most likely receiving a partial fill because it has low liquidity in the market. Low liquidity means that not many people are trading the contract when you place the order. Partial executions occur when there are not enough matching orders to fill an entire order at the specified price or better.
Keep in mind, there must be a buyer and seller on both sides of the trade for an order to execute, so your one order may be filled in multiple, partial, executions. Moreover, your order may simply go unfilled if both a buyer and a seller cannot be matched even for partial executions.
What types of options strategies does Robinhood support?
We’re required to create levels of options trading that determine which customers can execute specific strategies, depending primarily on the customer’s 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, customers who are given a Level 2 designation can execute the following options trades:
- Long Calls, Long Puts
- Covered Calls
- Cash-Covered Puts
Customers assigned a Level 3 designation can execute all of the above trades, along with the whole collection of fixed-risk spreads, including Iron Condors, Iron Butterflies, and Credit Spreads.
Will trading options affect my day trades?
Yes. Just like stock trading, buying and selling the same options contract on the same day will result in a day trade. It is the same contract if the ticker symbol, strike price, expiration date, and type (call or put) are the same.
Keep in mind, you’re only allowed to make 3 day trades within a 5 trading day sliding window before being considered a pattern day trader.
You can learn more by visiting our Help Center article, “Pattern Day Trading.”
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 orThe Options Clearing Corporation.