Placing An Options Trade - Robinhood

Placing an options trade

Robinhood empowers you to place options trades within your Robinhood account.

1. Search the stock, ETF, or index you’d like to trade options on using the search bar (magnifying glass)
2. Select the name of the stock, ETF, or index
3. Select Trade → Trade options on the detail page

You can learn about different options trading strategies by checking out Basic options strategies (Level 2) and Advanced options strategies (Level 3).

If you have multiple accounts (such as an individual investing account and an IRA), make sure you've chosen the correct account before placing a trade.

For existing options positions or pending orders, you can swipe to take the following actions in the app:

1. Go to Account (person icon), Retirement, or Options
2. For an existing position:

• Swipe right to buy or open it

• Swipe left to sell or close it

  For a pending order:

• Swipe right to cancel it

• Swipe left to replace it

3. If applicable, update the trade details and swipe up to submit

Check out Trading with Robinhood Legend for information on trading options in Legend.

There are many things to consider when choosing an option:

• The expiration date is displayed just below the strategy and underlying security. 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 natural price (by default) or the mark price. Note that if there are no bids, the mark price will show as $0.01. See below for more details.
    • The +/- % change is today’s cost movement for the contract.

• The break-even point is where the underlying security 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 percentage change the underlying security would need to move for you to break even on the option at expiration.

• The chance of profit percentage is the probability of making a profit at the option’s current mark price if held until expiration.

Chance of profit is an estimate based on model assumptions and doesn't guarantee future results. Numerous factors that aren't reducible to a model determine the actual chance of profit for a particular option contract or strategy.

You can place Good-til-canceled (GTC) or Good-for-day (GFD) orders on options. A GTC order remains open for 90 days until you cancel it, or it’s filled. A GFD order is automatically canceled at market close on the day it’s placed if it doesn’t execute.

You can view the price (and determine the theoretical value) of an options contract in the following ways:

• Natural price is either the ask price (if you’re buying an option), or the bid price (if you’re selling an option)
• Mark price is the midpoint between the ask price and the bid price, and is sometimes used for simplicity

As a reminder, the bid price is the highest price other traders in the market are willing to pay for an asset at a moment in time, and the ask price (also known as the offer) is the lowest price traders are willing to accept for an asset at a moment in time.

By default, the Natural price is shown when buying and selling options, but you can change it to show the Mark price instead on the web or in the app:

• On the web, while placing a trade hover over the Price column title, select Edit (pencil icon), and then select Mark price.
• In the app, while placing a trade select Edit (pencil icon), and then in Default price, select Mark price.

Regardless of your default setting, mark price will still be used for:

• Multi-leg orders
• Options rolling
• Calculating current price, total return, and other information regarding contracts you currently hold (e.g. your portfolio return)

If no buyers are currently available in the market, the mark price will show as $0.01 for single-leg positions.

We’re required to evaluate whether various levels of options strategies are appropriate for customers, based on information, such as their trading experience, investment objectives, and financial situation. Each brokerage has the discretion to set the specific parameters for their customers.

With a Level 2 designation, you can execute options trades like: Long calls, Covered calls, and Long puts.

With a Level 3 designation, you can execute all of the above trades, along with limited risk spreads like: Credit spreads, Debit spreads, Iron condors, and Iron butterflies.

Just like stock or ETF trading, buying and selling (or selling and buying) 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.

Because of pattern day trade restrictions, you’re generally limited to no more than 3 day trades in a 5 trading day period, unless you have at least $25,000 of portfolio value (minus any crypto positions) in your margin account at the end of the previous day.

If you have a cash account, you're not subject to pattern day trading restrictions, but you can't access certain features, like trading with unsettled funds.

Review our Day Trading Risk Disclosure Statement and the FINRA Options investing Information to learn more about the risks.

Robinhood doesn’t promote day trading. Day trading can be extremely risky. Day trading is generally not appropriate for someone of limited resources, limited investing experience, and low risk tolerance.