How do I trade options?
You’re ready to place your first options trade–fantastic! Follow these steps to get started:
- From the home page, tap the magnifying glass in the top right corner
- 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”
- Choose your strategy. You can learn more about your options in our “What's an option?” article.
How do I choose an option?
Once you’ve navigated to Options (see above), we’ll present the order types available. Once you’ve selected your strategy, you’ll see the following information:
- Expiration dates are displayed just below the strategy and underlying stock. You can scroll right to see expirations further into the future.
- 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.
- What’s the price and percent change?
- 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?
Certain regulatory standards restrict which stocks are allowed to have options. Some of these include:
- Stocks with low prices
- Stocks with low trading volumes
- Stocks with low market caps
Moreover, Robinhood does not support options trading on stocks we do not support. For a list of eligible stocks on our platform, check out "Available Securities on Robinhood".
What kind of options orders can I place? Why am I only allowed to place limit orders?
Because the spreads on options contracts are typically much larger than stocks, and because options contracts have much less liquidity in the market, we’ve decided not to support market orders. You’ll find that 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 for your contract. You can place Good-til-Canceled or Good-for-Day orders.
How does Robinhood value options?
The “value” of the option is the number that we display on the Options screen. This is the value we use to calculate your overall portfolio value on the homescreen and in graphs. The number you see is the option’s mark price. The mark price is the midpoint between the bid price and the ask price; and it’s used industry-wide as the simplest way to determine the value of an option.
Why aren’t my orders getting filled? What’s a partial fill?
When an options contract has low liquidity in the market, orders are more likely to receive partial executions. Partial executions occur when there are not enough matching orders to fill an entire order at the specified price or better.
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 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 the 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?
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 symbol, strike price, expiration date, and type (call or put) are the same.
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.