Robinhood empowers you to place your first options trade directly from your app.
Placing an Options Trade
You can learn about different options trading strategies in our Options Investing Strategies Guide.
Things to Consider When Choosing an Option
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.
Good-til-Canceled versus Good-for-Day Orders
You can place Good-til-Canceled or Good-for-Day orders on options. 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 doesn’t execute.
Keep In Mind
Options don’t trade in the extended-hours session.
Options Valuations and Mark Price
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 your home screen and in your 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.
We’re required to create levels of options trading that determine who can execute specific strategies, depending primarily on your 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, if you’re given a Level 2 designation, you can execute the following options trades:
- Long Calls, Long Puts
- Covered Calls
- Cash-Covered Puts
If you’re given a Level 3 designation, you can execute all of the above trades, along with the whole collection of fixed-risk spreads, including Iron Condors, Iron Butterflies, and Credit Spreads.
Just like stock trading, buying and selling the same options contract on the same day will result in a day trade. It’s the same contract if the ticker symbol, strike price, expiration date, and type (call or put) are all the same.
Keep In Mind
You’re only allowed to make three day trades within a five-trading-day sliding window before being considered a pattern day trader.
Gold Buying Power
Options on Robinhood behave like high-volatility stocks, which means that you can’t use Gold Buying Power to purchase them.
Options don’t trade during the extended-hours session on Robinhood.