Strategize Your Risk-Adjusted Returns Effectively With Robinhood Options Trading

Robinhood’s options trading platform provides user-friendly tools for navigating your stock market investments. These sophisticated tools allow experienced traders to strategize effectively, optimizing returns while managing risk. By offering sophisticated tools like advanced charting, Robinhood’s options trading has the potential to enhance your risk-adjusted returns, empowering you toward achieving your financial goals.

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Earn up to 3% extra on annual contributions with Robinhood Gold

Get 1% extra without Robinhood Gold, every year.

All trades are commission-free

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On Robinhood's Website

*Offer details

3% match requires Robinhood Gold (subscription fee applies) for 1 yr from the date of first 3% match. Must keep Robinhood IRA for 5 years.

You must have earned (wage) income in order to contribute to an IRA. The funds that earned the match must be kept in the account for at least five years to avoid a potential Early IRA Match Removal Fee. For more information, see the IRA Match FAQ.

Funds being contributed into or distributed from retirement accounts may entail tax consequences. Contributions are limited and withdrawals before age 59 1/2 may be subject to a penalty tax. Robinhood does not provide tax advice; please consult with a tax adviser if you have questions.

The Robinhood IRA is available to any of our U.S. customers with a Robinhood brokerage account in good standing.

How To Improve Returns With Robinhood

Robinhood’s options trading platform presents a unique opportunity for savvy investors to enhance their risk-adjusted returns. You can employ different options strategies, such as buying calls and puts, selling covered calls or executing more complex multi-leg strategies. Each of these strategies has its own risk/reward profile and requires different levels of understanding and risk tolerance.

For example, you can maximize your risk-adjusted returns by adopting a disciplined and strategic approach. You also can diversify your options portfolio by allocating investments across different underlying assets and strike prices, which can help mitigate the potential risks associated with any single investment. All options contracts are sold for a fee called a premium. The contract defines a specific price for the trade, called the strike price, and a deadline for the exchange to take place. You can also use stop orders to limit potential losses from a trade going against you.* Finally, you can keep a close watch on market trends and use Robinhood’s advanced tools to gain insights into market volatility and price movements.

Read more: What are options?

Robinhood Option Trading Features

Robinhood’s options trading platform boasts numerous features designed to improve the trading experience and give investors an edge: The platform offers real-time market data, providing investors timely information to make informed decisions. It also comes with an intuitive interface that enables easy navigation and execution of trades.

Advanced Charts

Robinhood’s advanced charts offer an array of technical indicators to help you track and modify your investment strategies. These charts can make it easier to identify patterns and trends by analyzing the price and volume movements over time, helping you predict the future movement of the market and select the appropriate entry and exit points.

For example, the moving average (MA) indicator lets you track the average price of a stock over a given period. The relative strength index (RSI) indicator measures the strength of a stock’s upward or downward trends and can help you determine when it may be overbought or oversold. Meanwhile, the moving average convergence divergence (MACD) indicator tracks the relationship between two moving averages, indicating potential signals for buying or selling a stock.

Options Strategy Builder

The Options Strategy Builder is a cutting-edge tool developed to help investors create customized options trading strategies. Each strategy in the builder is related to an outlook, or how you think an underlying asset may perform. The outlook filter allows you to explore how employing different options strategies might be able to take advantage of your particular outlook on a stock.

You can use the tools to choose a strategy, including single-leg strategies, vertical spreads, straddles and strangles, and calendar spreads. The Options Strategy Builder also makes it easy to adjust strike prices and expiration dates and place orders. Moreover, Robinhood’s Strategy Builder provides advanced charting capabilities.

Read more: Options Trading Explained

Watchlist

The Robinhood watchlist lets you customize a list of stocks you’re interested in based on your individual investment goals and strategies. This makes it easier to monitor options contracts to see hypothetical returns and make decisions about buying or selling options based on their performance. You also can see your pending market orders and limit orders for stocks and view each stock’s detail page. This gives you more control over your investment portfolio and can help you improve returns when trading options.

Robinhood Retirement

With options trading in Robinhood Retirement, you can tailor your investment strategy to fit your financial goals and tolerance for risk while taking advantage of a 1% match every year** . Options trading can provide the opportunity to generate income, hedge against market downturns with long puts, generate income with covered calls and use zero-cost collars. There are no commissions or per-contract fees.

Added Flexibility With Cash Accounts

By harnessing the power of options trading through their cash accounts, Robinhood users can further enhance their investment strategies through options trading in cash accounts. With cash accounts at Robinhood, investors can execute options trades using cash on hand without borrowing or trading on margin.

Options Rolling

Robinhood’s options rolling feature can help you keep your options positions active by seamlessly shifting to a new expiration date. This means that if your options contract is about to expire, instead of letting it expire and potentially losing your gains, you can keep the position open by closing the existing contract and buying a new contract with a longer expiration date. This feature is particularly useful if you want to hold your positions for a longer period but don’t want to take on the full risks associated with holding until expiration.

Furthermore, this feature provides an opportunity to adjust your positions according to market conditions. By adjusting your position, you can limit your potential losses and maximize your gains. For instance, if the price of an underlying asset moves against your position, options rolling gives you the ability to adjust your strike price, expiration date or both***.

Robinhood Option Trading Fees

Robinhood has made a name for itself with its commission-free stock trading platform, an approach that expands to options trading. The startup’s fees are exceptionally low, with $0 per contract and $0 commission fees, alongside a $0.01 options regulatory fee per contract and a $0.02 OCC clearing fee per contract with a maximum of $55 per trade.

When compared to competitors such as Fidelity and TD Ameritrade, Robinhood’s fees are extremely competitive. Both Fidelity and TD Ameritrade charge $0.65 per contract, plus an options regulatory fee that varies by provider and account type.

Customer Support

Robinhood’s customer support is available 24/7. You can contact Robinhood through the platform’s online chat option or request a call back in the app. There’s also an online resource center featuring a wide range of topics, including investing with options.

This around-the-clock service allows for real-time assistance regardless of the time zone or hour. This is particularly beneficial when trading in the volatile world of options, where questions or issues may arise outside of typical business hours.

With Robinhood’s dedicated team of customer service professionals, you can trade with confidence, knowing help is always just a call or click away. This consistent support, combined with Robinhood’s user-friendly interface and educational resources, fosters an environment of learning and growth for even the most experienced traders.

* Once triggered, stop market orders become market orders and may not fill near the stop price. Thus can become especially risky during periods of market volatility. Also due to some delays, RH stop orders may not be ready for launch.

** The funds that earned the match must be kept in the account for at least five years to avoid a potential Early IRA Match Removal Fee. Contributions are limited and withdrawals before age 59 1/2 may be subject to income taxes and possible penalties. For more information, see the IRA Match FAQ.

*** Rolling options does not ensure a profit or guarantee against a loss. An investor may also end up compounding their losses. By rolling out, the duration is extended, which can also increase risks as there’s more time for the underlying security’s price to move unfavorably.

Disclosures:

Options trading entails significant risk and is not appropriate for all customers. Customers must read and understand the Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount.

Robinhood Financial does not guarantee favorable investment outcomes. The past performance of a security or financial product does not guarantee future results or returns. Customers should consider their investment objectives and risks carefully before investing in options. Because of the importance of tax considerations to all options transactions, the customer considering options should consult their tax advisor as to how taxes affect the outcome of each options strategy. Supporting documentation for any claims, if applicable, will be furnished upon request.

Trades of stocks, ETFs and options are commission-free at Robinhood Financial LLC. Other fees may apply. Please see Robinhood Financial’s Fee Schedule to learn more.