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Can I Do Options Trading on Robinhood?

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Written by Timothy Sykes
Updated 4/3/2023 9 min read

The main question here isn’t whether you can — the answer is yes, you can trade options on Robinhood. The question is, should you trade options on Robinhood?

Read on to learn more about options trading on Robinhood!

Trading on Robinhood

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When you’re deciding on a broker, make sure they’ll fit your needs. There’s also no rule that says you can’t have accounts at multiple brokers, and trade certain strategies with the ones that are best suited to them.

Robinhood is easy to use, but it doesn’t have a wide range of features and lacks a trading simulator. It also has a reputation for service disruptions.

The dealbreaker for me as a penny stock trader is its block on most OTC stocks. As a rule of thumb, I want a stock trading app that doesn’t get in my way.

If you go into it with open eyes, Robinhood could work for you. Just make sure that it will be able to do everything you need for your trading strategy.

Can You Trade Options on Robinhood?

Tim Sykes in a boat in Italy checking the stocks on his top penny stocks list
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You can trade options on Robinhood if you meet its options trading requirements. If not, Robinhood will let you know where you fell short and allow you to try again.

The approval process protects small-time traders from the high potential for losses. Traders blowing up their accounts happens all too often in options trading.

Like other brokers, Robinhood has several levels of options trading approval. The thought behind this is that experienced traders can handle higher risk. It’s related to what I tell my students every day…

Smart traders know to cut losses quickly!

Factors to Consider When Choosing an Options Strategy

Options trading can lead to big gains, but are big risks as well. Trading options is complicated, and I like to keep things simple.

As usual, you should never trade randomly. You might need to test a few options strategies before finding the one or more that best suit you.

How to build good options trading strategy:

Do the Research

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History is a great teacher. Learn chart patterns like the back of your hand.

Study Stock Price Movements

You can begin applying your knowledge by getting in a lot of screen time. That’s how you develop an instinctual feel for a stock’s price moves. That will lead to the type of trade ideas that options trading is built on.

Make Watchlists

A watchlist is the bedrock of all trading. Every trade you make should come from your watchlist.

Don’t copy somebody else’s watchlist, whether it’s Discord traders, friends, or even me. Do your homework, research each stock, and make your own watchlist. It’s the only way that you’ll become a self-sufficient trader.

That doesn’t mean you shouldn’t learn from other traders’ watchlists. You absolutely should! Just make sure that you’re paying attention to the thought behind a watchlist, not just copying stock picks. That leads to random trading, and random trading is one of the best ways to blow up your account.

Sign up for my NO-COST weekly watchlist here!

Set Reasonable Goals and Tight Risk

Your trading plan should be built with reasonable goals and tight risk. For most trades, I aim for a 5–10% profit, with a much smaller risk.

Tomorrow is another trading day, so cut losses as quickly as possible — don’t hold and hope.

I don’t trade options, but my former student Mark Croock does. In fact, I think he’s one of the best options traders on the planet. Options trading is a big part of how he’s built $3.9 million in lifetime profits.

Wanna be like Mark? Sign up for his Evolved Trader options trading mentorship today!

Good Till Canceled (GTC) vs Good For Day Orders (GFD) on Robinhood

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I want my orders to execute when and where I plan. I’d rather an order not get filled than get filled at the wrong time.

Putting your orders on GTC and not watching your positions means you’ll take any result you can get. And what you get will usually be a loss.

If you leave an order on GTC, you can’t control its execution, and current market conditions can change when you’re not looking. Betting on a stock’s prospects and not paying attention to its actual chart is the best way for a trader to lose money.

It’s the same reason I don’t use market orders…

You can’t control how millions of traders behave. What you can control is how you react to changes in the market — which means you need to be watching the market and change your approach accordingly.

GFD orders are slightly better because the order will get canceled if it doesn’t execute by the market close. But the principle here is still the same — GFD is a set-it-and-forget-it type of deal. If you’re trading the type of volatile stocks I like to trade, this is a recipe for disaster.

Options Trading Strategies on Robinhood

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When it comes down to it, the best brokerage firm is the one that fits your strategy and comfort level. Robinhood works for millions of options traders, and it can work for you if you know what you want to get out of it. If you’re looking for a platform with no learning curve, it might be good for you.

Just because Robinhood is easy to use doesn’t mean it will be easy to become profitable — it isn’t easy with any broker! The fact is, most traders lose, regardless of the app they use to trade. Becoming a self-sufficient trader requires years of study. It isn’t as easy as Robinhood makes you think.

The best way to develop your own options trading strategy is to learn from someone who’s been there before — that’s why I keep name-dropping Mark Croock and his Evolved Trader program. Learning from those who know more is the best shortcut through the trial and error ahead of you… which might be mostly error if you’re not careful!

Have you tried options trading with a Robinhood brokerage account? Share your experience in the comments below!

Can I Do Options Trading on Robinhood FAQs

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For the main question — yes! As far as the “how,” read on…

How long does it take to get approved for options on Robinhood?

Robinhood options trading approval times vary. Usually, the process takes 24 to 48 hours. The broker will check your knowledge of options, trading experience, current employment, and whether you work in the financial industry.

How much money do you need for options trading on Robinhood?

There’s no minimum deposit needed to trade options on Robinhood. But a low account balance might signal that you don’t have enough experience for Robinhood to approve you for options trading. In addition, Level 3 options trading isn’t available for cash accounts, and options day trades will be constrained by the PDT for accounts under $25,000.

How do I trade options on Robinhood?

First, you’ll need to get approved to trade in the options market. Once that’s set, look up the stock ticker and hit the “Trade” button, then select “Trade options.” That’s it!

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Timothy Sykes

Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity. Read More

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* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

Millionaire Media 66 W Flagler St. Ste. 900 Miami, FL 33130 United States (888) 878-3621 This is for information purposes only as Millionaire Media LLC nor Timothy Sykes is registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Millionaire Media LLC and Timothy Sykes cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Millionaire Media LLC and Timothy Sykes in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Millionaire Media LLC and Timothy Sykes accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.

Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”