Robinhood options trading fees, platform, and tools review. Puts and calls per contract cost, Greeks, delta, vega, gamma, theta.

Robinhood Options Trading Overview

Robinhood and Firstrade are the first choices for novice investors and traders with limited capital when looking for brokerage services. Their $0 transaction policy makes it a haven for investors of all experience levels to be able to grow their account without the costly fees that disproportionately affect smaller account sizes. Similarly, the company charges no minimum account fees or account maintenance fees.

Considering other brokerages charge upwards of $10 per transaction in addition to at least $.50 per contract, a Robinhood account can start to accrue real savings fairly quick. To highlight the advantages of this structure, consider the investor who only wants to allocate $500 toward a specific trade. With the standard $5 transaction fee, that same investor needs to achieve a return of at least 2%, just to break even.

Robinhood Options Pros and Cons

While Robinhood’ fee structure makes having access to the platform a useful tool in any investor’s arsenal, how it is used varies from user to user. Less experienced investors will find the incredibly simple user interface welcoming as they begin to learn more about the markets, and more experienced investors will enjoy the constraints of the platform as a way of simplifying their trading or investing processes.

But there are cases where the uber elegant mobile application can get in the way of investing plans and risk management. And it is important to consider them when deciding upon a platform. Robinhood is the base package. It will simply get the job done but there are areas where it naturally falls short. The weak features of the platform include limited visibility of options data and limited accessibility of an investor’s orders. This naturally means that there is a ceiling to how active and complicated your investment and trading strategies can get before you will need to open an additional account with a more customizable broker (for a more indepth options data use free TD Ameritrade Thinkorswim platform).


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There’s an App for That

While Robinhood does support trade execution and account management via its web platform, its intuitive mobile user interface is what really sets it apart from the competition. Once logging into the mobile app, the dashboard greets you with a clean, at-a-glance line chart of your account’s performance over various timeframes. Just below that are lists of stocks or options you own in your account, alongside a watchlist of stocks you are currently interested in. Note that you cannot add specific option contracts to your watchlist which again, adds to the amount of maneuvering necessary to actively trade.


Robin Hood Chart


Both the portfolio and watchlist sections have a 1-day line chart alongside a numerical statistic of either the stocks last price, percent change, or other various return metrics. This makes it very easy to see how your portfolio is performing day-to-day. The beauty in Robinhood user interface is its incredibly thorough color coordination: green for positive on the day and red for negative.


Robin Hood Options Trading

Trade Research

Trade execution is also fairly intuitive on the mobile platform. You can search a symbol to trade either by company name or ticker. Once a stock is selected, Robinhood does a really nice job of aggregating various data sources to present a high level overview of the company. Recent news, technical data, fundamental data, and earnings are all listed for you to scan with a simple scroll.

Where the complexity of equity derivatives really starts to wear on the simplicity of the platform, is in displaying all of the data associated with the options. Equity derivatives are notoriously complicated financial instruments that come with a host of necessary information to really understand how they behave. Robinhood with its simple design, doesn’t quite meet the challenge of allowing you to make the most informed options decisions.


Robin Hood Buy Call Option


Typically, most option brokerages will display calls and puts on the same row, sorted by strike price. It is also common for those brokerages to include information like the ‘Greeks’, delta, vega, gamma, and theta. The drawback of Robinhood is that it makes it a little tricky to find those specific values. The option’s trading screen is controlled by two toggle buttons at the top of the screen: one for Buy/Sell and the other for Call/Put, which really silos what you can look at once. The platform does have data for The Greeks but to view it you have to select each option one by one, which makes it difficult to really understand how the those metrics relate across strike prices and expirations. This lack of visibility practically limits your options trading to purely directional moves, which is fine depending on your investment strategies.


Trading Options on Robinhood

The trading execution does a nice job of taking away the complicated features of trading. Once the specific option to trade is selected, it is only a matter of filling out the desired quantity and price before swiping the order to the exchange. But the most glaring drawback of the platform is its lack of variety of order types. For Robinhood, there are only limit orders available; no market orders, stop loss orders, or stop limit orders. While it is very likely that the brokerage will in the near future add more order types to its platform, for now its current configuration can make it difficult to properly manage your portfolio’s risk.

As mentioned above, order management is also a weakness of the elegant platform. There is no section of the user interface to easily view and edit live or pending orders. The only route for modifying your orders is to navigate to the sidebar and then to the History tab. There you can see a chronological history of all orders placed, filled, or cancelled. But finding your live orders is time consuming and once you do, the only modification you can make is to cancel it entirely.


Robin Hood Options Trading

On the Close

Robinhood is a stellar attempt to bring no-fee trading to the derivatives world. What worked so well for the company’s flagship product, simplicity and ease of use, has a tough time translating to the complicated world of options. Before committing to any brokerage account, it’s important to know exactly what your needs are, and Robinhood is incredibly well-designed for simple transactions. Afterall, the entire platform lives on a mobile device.

Those just getting into the options space or those with a little more experience who want a no-cost way of experimenting with new trade ideas will love Robinhood and Firstrade. These are great jumping-off point. But as your trading experience and skill sets grow, you will quickly start to expose the limitations of the platform.

Robinhood is still widely used in some capacity by many professional traders who want to explore and tinker with new trade ideas. Furthermore, the young fintech startup has shown itself very quick to adopt new features over short periods of time. So the chances are if you find a vital feature missing from their services, wait a few months and they will likely find a way to implement it into their platform.


Robinhood Review and Rating

3-star brokerage firm rating



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