Robinhood Advances with New Free Multi-Leg Options Strategies

by on Jun 22, 2018

Robinhood, which has offered basic options trading strategies since December 2017, recently announced in a blog post and on social media the launch of mobile-only advanced, multi-leg options strategies in single trade orders. According to the blog post, the firm’s options trading volume is already over $2 billion, and the introduction of advanced strategies—including iron condors, straddles and strangles—will likely attract even more traders and more volume. Characteristically, Robinhood offers both basic and advanced options strategies as commission-free products.

Advanced Options Trading on Robinhood App

Since its mobile-only launch, Robinhood positioned itself as a disrupter in the retail investor market, offering completely commission-free trading when most discount retail brokerages charge closer to a $4.95 commission per trade. The services Robinhood offered, though, were notably limited to simply buying and selling stocks. So too were the resources it provided to enhance the trading experience—most other firms provide retail investors with a suite of resources, from education to research to advanced charting whereas Robinhood only offered simple charts and basic price details.

The launch of options trading last year and advanced strategies this month changes all that. Most discount firms charge between $4.95 and $6.95 for options trading commissions, plus a per contract fee of $0.75. Robinhood cut that rate to $0.

Robinhood Option Trading Prices Comparison Infographic

In addition, Robinhood has recognized the importance of educating investors as part of its overall strategy. The firm announced the launch of its Discover feature last month, which guides investors through placing option trades without relying on unnecessary jargon and offers educational resources on options terms and strategies. That said, Robinhood still lags behind traditional firms in terms of resources offered to investors, which often include articles, videos, examples and infographics.

No one knows for sure how more traditional retail brokerages—like Charles Schwab, TD Ameritrade and E*TRADE, to name a few—will react to this, but it certainly means a stiffening of the competition for new and active options traders. After all, it’s hard to compete with free.

Robinhood App Trading Platform