Robinhood Glossary

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Here’s some investing terminology you may come across.        

 

We know that stock, options, and crypto trading can sound really complicated sometimes. We’ve put together a list of terms and concepts you may come across as you begin to trade these assets on Robinhood. Happy learning!

ADR
Stocks

ADRs (American Depository Receipts) make it easier for American investors to buy shares of foreign companies not listed on U.S. exchanges like the NYSE or Nasdaq. Owning an ADR is like owning a share of the company, except the shares of the ADR are denominated in American dollars instead of the currency of the company’s home country. These shares still pay dividends and are still subject to capital gains taxation in American dollars. Feel free to check out the assets available on Robinhood for more information.

Assignment
Options

If you sell an options contract, you may be “assigned,” which means the person you sold the contract to wants to “exercise” and make good on the terms of the contract. For a more detailed explanation of how assignment works on Robinhood, check out our Options Guide.

Bid-Ask Spread
Stocks, Options, Crypto

The bid-ask spread represents the supply and demand for a stock or option. The bid price is the highest price other traders in the market are willing to pay for the asset, and the ask price is the lowest price traders are willing to accept for the asset.

For options, the price we display in the app is the mark price, which is the midpoint between the bid price and the ask price. For example, if the bid price is $.10 and the ask price is $.20, the mark price is $.15. If you enter a limit order on an option that has a large spread, you'll see the mark change in the app.

For stocks, we show the last trade price reported by Nasdaq.

Bitcoin
Crypto

Bitcoin, created in 2009, is the first decentralized cryptocurrency. Like many cryptocurrencies, it’s not tied to any government or issuing authority, and there’s typically no middleman involved when it’s used to purchase goods. Check out our Crypto Guide to learn more about trading Bitcoin on Robinhood.

Blockchain
Crypto

A blockchain is a digital, decentralized ledger of cryptocurrency transactions. The Bitcoin and Ethereum networks are both blockchains where all transactions are recorded.

Break-Even Point 
Options

If your options contract reaches its break-even point, it’s now cost-neutral, meaning you’ve at least made back the money you paid to open the position. For a more detailed explanation of how to determine you break-even point, check out our Options Guide.

Buying Power
Stocks, Options, Crypto

Buying power is the amount of money you can use to purchase stocks, options, or cryptocurrencies.

Call
Stocks

Cash-in-lieu refers to a cash payment a company gives to a shareholder who owns a fractional share resulting from a corporate action. Check out our Trading Guide to learn more.

Corporate Action
Stocks

A corporate action is any activity a company takes that results in a significant change to the company's stock. Learn more about the different types of corporate actions and how they affect your account in our Trading Guide.

Cryptocurrencies
Crypto

Cryptocurrencies are digital currencies created and stored electronically in the blockchain using cryptography (hence “crypto”) to control their creation and to verify the transfer of funds. Cryptocurrencies are unique because they don’t have any physical form and exist only in the network.

Delisting
Stocks

A stock is “delisted” when it’s been removed from the stock exchange. Delisted stocks don’t trade on Robinhood. You can learn more about what to do if you own a delisted stock in our Trading Guide.

ETF
Stocks

An exchange-traded fund is a group of assets pulled together that trades like a normal stock. Ownership of the fund (they could be a collection of stocks, bonds, or derivatives, for example) is divided into shares that you can buy and sell in the market. 

Ethereum
Crypto

Like Bitcoin, Ethereum is a digital currency based on blockchain technology. Though the applications of Ethereum extend beyond currency, the coin, technically called Ether, is a tradable asset on Robinhood. Its symbol is ETH. Check out our Crypto Guide to learn more about trading Ethereum on Robinhood.

Exercise
Options

If you buy an options contract, you have the right to “exercise” it, which means you’d like to fulfill the terms of the contract. For a more detailed explanation of how exercising works on Robinhood, check out our Options Guide.

Extended-Hours Trading
Stocks

Robinhood users have access to extended-hours trading, which means you’ll have an extra two and a half hours per day to trade–9 AM EST to 6 PM EST.

Feed
Crypto

Robinhood Feed is a social platform that lets you engage with the Robinhood community and stay on top of what’s happening with cryptocurrencies at any given moment.

FINRA

Robinhood Financial is a member of the Financial Industry Regulatory Authority, Inc. (FINRA), a self-regulatory organization that promotes honesty and fairness in the broker-dealer industry.

First In First Out (FIFO) 
Stocks

This refers to the way Robinhood calculates your cost basis. When you sell stocks, we record the cost you paid for your positions in the order you bought them. You can view your average cost basis for a stock you own on the stock’s Detail page.

Forward Stock Split
Stocks

If a company executes a forward stock split, it’s increasing the number of shares outstanding without changing the overall market value of the shares. There will be more shares in the market, but each share will be worth less than it previously was. Check out our Trading Guide to learn more.

Fractional Shares
Stocks

A fractional share is a piece of one whole share of stock. We don’t let you buy or sell fractional shares in the market, but they can result from stock splits. You may instead receive cash in lieu of any fractional shares owed to you as a result of a split. Check out our Trading Guide to learn more.

Gold Buying Power
Stocks

If you have a Robinhood Gold account, Gold Buying Power is the money Robinhood Financial lends you to buy stocks in the market. Check out our Gold Guide to learn about how you can use Gold Buying Power.

Gold Withheld
Stocks

Gold withheld is Gold Buying Power that we’ve removed from your account to remain in compliance with financial regulations. You can check out our Troubleshooting Guide for different reasons why you may have Gold Buying Power withheld.

Good-til-Canceled (GTC)
Stocks, Options, Crypto

Good-til-Canceled refers to a type of order you can place in the market. A GTC order will  remain open until you cancel it, the stock undergoes a corporate action and all open trades are canceled, or it’s filled.

Good-for-Day (GFD)
Stocks, Options

Good-for-Day refers to a type of order you can place in the market. A GFD order will remain open until market close on the day you place it (if it doesn’t execute before the close). Market close is 4 PM EST.

High-Volatility Stocks
Stocks

Volatility is a measure of how dramatically the value of a stock changes in a given period. Highly volatile stocks are considered riskier investments, and regulations inform how much money you can borrow to invest in these stocks. Holding many high-volatility stocks can lead to Gold Buying Power withheld if you’re using Robinhood Gold. We also provide High-Volatility Stock Protection for Robinhood Instant accounts.

In the Money
Options

“In the money” refers to the value of an options contract’s underlying stock relative to the contract’s strike price. For a more detailed explanation of how this factors into the value of an options contract, check out our Options Guide.

Instant Settlement

If you have a Robinhood Instant or Robinhood Gold account, you have instant access* to funds from bank deposits and proceeds from sales. This means that if you sell a stock today, you can use the funds right away, instead of waiting the typical two trading days for access to those funds. 

*The amount you can receive instantly depends on your account type.

Interest Payments
Stocks

Robinhood pays you interest generated from your stocks and cash, similar to how your bank pays you interest on your deposited cash.

IPO
Stocks

An initial public offering is the process of raising capital by offering shares of the company to the public for the very first time. You can place pre-IPO limit orders on certain stocks in your Robinhood app.

Limit Order
Stocks, Options, Crypto

A limit order allows you to choose the price you’d like to pay for an asset, so that if the asset rises or falls within that range you’ll get executed at that price or better. For example, if ABC stock is trading at $10, you can place a limit buy order at $9, which will execute when ABC stock is offered at $9 or lower in the market. The same is true for limit sell orders: you can specify the minimum amount you’re willing to receive when you sell your asset.

Low-Priced Stock
Stocks

A low-priced stock, or “penny stock,” generally refers to a stock issued by a company that’s valued at less than $5 per share.

Low-Volume Stock
Stocks

A stock has low volume if there aren’t very many people trading it in the market. The prices for these stocks can change dramatically because each individual trader has outsized influence on the price of the stock. This makes them inherently more risky.

Margin
Stocks

Buying stocks on margin means that you’ve borrowed money from your brokerage to fund your purchase. Robinhood Gold is a margin account. Check out our Gold Guide to learn more about using margin at Robinhood.

Margin Maintenance 
Stocks

The margin maintenance requirement in Robinhood Gold is the minimum portfolio value you can have before you’re at risk of getting into a margin call. Check out our Gold Guide to learn more about avoiding margin calls.

Margin Call
Stocks

A margin call is warning that your portfolio value is below your margin maintenance requirement. If you get into a margin call, we may sell some of your stocks in order to bring your maintenance requirement down and your portfolio value up. Check out our Gold Guide to learn more about avoiding margin calls.

Market Hours
Stocks, Options

The stock market opens for trading at 9:30 AM EST and closes at 4 PM EST during normal trading sessions. Extended-hours trading begins at 9 AM EST and ends at 6 PM EST.

Market Order
Stocks

A market order is simply an order that will execute at the next price in the market. Be careful, though, because stocks that are highly volatile can change price quickly, and you’re never guaranteed a price with a market order. Robinhood collars market buy orders 5% for your protection, but market sell orders aren’t collared.  

Merger
Stocks

If two companies merge, there are almost always significant implications for the shareholders of both companies. Typically, the acquiring company will choose to liquidate the shares of the acquired company for cash or give out shares of their own company to shareholders of the acquired company. Check out our Trading Guide to learn more.

Nasdaq
Stocks

Nasdaq, like NYSE, is a stock exchange where buyers and sellers can trade stocks. A notable difference between the two is that Nasdaq has no physical location because it’s an entirely electronic trading network. Nasdaq is also an important index for American technology stocks.

NYSE
Stocks

The New York Stock Exchange, known as NYSE, is the biggest stock exchange in the world.

Obligation
Options

If you sell an options contract, you have the “obligation” to make good on the contract if you’re assigned. For a more detailed explanation of how assignment works on Robinhood, check out our Options Guide.

Option
Options

An option is a contract between a buyer and a seller. These contracts are part of a larger group of financial instruments called derivatives. This means that the instrument is derived from another security–in this case, a stock. Check out our Options Guide to learn more.

Out of the Money
Options

“Out of the money” refers to the value of an options contract’s underlying stock relative to the contract’s strike price. An options contract isn’t profitable for the buyer if it’s out of the money. For a more detailed explanation of how this factors into the value of an options contract, check out our Options Guide.

Partial Execution
Stocks, Crypto

You’ve received a partial execution if only some of your order gets filled. You can learn more about partial executions in our Trading Guide.

Premium
Options

When you buy an options contract, the premium is the price you pay the seller for the contract. For a more detailed explanation of how premiums work on Robinhood, check out our Options Guide.

ProxyVote
Stocks

ProxyVote is a third-party service we use to allow you to participate in shareholder meetings and elections. You’ll receive an email from ProxyVote before a relevant event occurs with instructions on how to participate.

Put
Options

A put option is a type of options contract. Owners of put options expect the stock to decrease in value, while sellers of put options expect the stock’s value to increase or remain the same. Check out our Options Guideto learn more about trading put options on Robinhood.

Regulation T Call
Stocks

Your account might get a Regulation T call, sometimes referred to as a Reg-T call, if your account doesn’t meet the initial margin requirement for stocks you’ve purchased. Check out our Troubleshooting Guide for more information on how this type of call can affect your account.

Reverse Stock Split
Stocks

If a company executes a reverse stock split, it’s decreasing the number of shares outstanding without changing the overall market value of the shares. There will be fewer shares in the market, but each share will be worth more than it previously was. Check out our Trading Guide to learn more.

Right
Options

If you buy an options contract, you have the “right” to exercise the contract. If you sell an options contract, you don’t have this right. For a more detailed explanation of how exercising works on Robinhood, check out our Options Guide.

SEC

The U.S. Securities and Exchange Commission (SEC) oversees and regulates Robinhood Financial on behalf of the United States government.

Settlement 
Stocks

Settlement is the time is takes stocks or cash to move from one place to the next. The normal stocks and cash settlement time is the trade date (T) plus two trading days, commonly referred to as T+2. With Robinhood Instant and Robinhood Gold accounts, you have access to instant settlement.

Spinoff
Stocks

A company’s board may decide to create a new subsidiary of their company. If they also award shareholders of the parent company shares of the new company, they’ve executed a spinoff. Check out our Trading Guide to learn more.

Strike Price
Options

You’ll encounter strike prices if you trade options. The strike price of an options contract is the price at which the contract holder can choose to exercise his or her contract.

Stock Split
Stocks

A company’s board can decide to execute a stock split if they want to increase or decrease the number of shares they have outstanding. Companies can execute a forward or reverse stock split. Check out our Trading Guide to learn more.  

Stock Transfer
Stocks

Stock transfer allows you to transfer shares of stock from other brokerages into your Robinhood account and vice versa.

Stop Order
Stocks

A stop order is an order type that triggers a market order to buy or sell when the stock reaches your designated stop price. For example, if XYZ stock is trading at $25, you can place a sell stop order at $20 to trigger a market sell order in the event the stock reaches $20 or lower.

Stop Limit Order
Stocks

Similar to a stop order, a stop limit order allows you to set a stop price. The difference is that a stop limit order will trigger a specified limit order when the stock reaches your stop price. You can use this type of order to set parameters around the price your trade will execute at once the stop is triggered, but there’s a risk that the order won’t execute if the stock price moves past your limit.

For examples, if XYZ stock is trading at $25, you can enter a sell stop limit order with a $20 stop and a $19.90 limit. Once the stock reaches $20, a limit order will trigger to sell XYZ stock when it’s trading at $19.90 or higher.

Time-in-Force
Stocks

To indicate how long your market, limit, or stop order will remain active, you can set a time-in-force. The time-in-force options include Good-for-Day (GFD) and Good-til-Canceled (GTC).

Two-Factor Authentication
Two-Factor Authentication is a tool that allows you to add another layer of security to your account. We highly encourage you to try it out!
Untradable
Stocks

If a stock is untradable on Robinhood, you won’t be able to buy or sell shares of it. You can learn more about why a stock may be untradable in our Trading Guide.

Wash Sale
Stocks

If you sell a stock for a loss, and then buy the same stock or a similar stock within 30 calendar days, you’ve executed a wash sale. The IRS prohibits taxpayers from claiming losses from wash sales for tax purposes.

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