Tips And Tricks Trading Options On Robinhood App

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Options trading is complex no matter what platform you use. Here are a few tips for the beginner trader to be mindful of. You can make huge gains trading options but you can lose money easily if you don’t know what you’re doing. Be mindful and if you’re not sure always paper trade before putting your own hard earned money to use.

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Comments

vox ymail says:

how can you have the web version?

Julio Dooley says:

I opened a Robinhood acct with the intention of trading options but quickly took the money back out. On their platform if you sell an option you can't use the money to buy another option until the next day. This is more costly than paying $5 per trade in commissions. I have a Think or Swim acct, an Interactive Brokers acct, and a Schwab acct I trade on a daily basis. So I'd rather pay the commission if I can immediately reuse the money. One time in the past with a cash acct (just like robinhood took till next day to clear) I lost thousands because I couldn't replace the calls I sold with puts (betting sock down). Of course the stock went down drastically the next day. Often it's not clear which way a stock will go on a short term basis so I'll have for example 10 calls and 8 puts on the same stock.

As far a day trading is concerned you can try avoiding it with options by selling say a 20 dollar call if you think the stock is going down and replacing it with a 20 dollar call with a different expire date (espec with weekly options) or a different strike price (22.5 call instead of 20 call).

Also I could not rely on pricing of options with Robinhood. I had to go to Inter. Brokers to get the actual price of an option which is a weighted average of the bid and ask prices taking into consideration the volume of bid and ask which you can't get on Robinhood.

If you could immediately use the cash from a sale on options like Ameritrade, int brokers, Schwab, anyone else I would use Robinhood but right now that is not the case.

Also in the video margin calls are mentioned, but if you trade options, no margin is available. Int brokers starts selling options about 1:35pm on expiration day on their own. Ameritrade will also sell before expiration. A few years ago they were more lax and if you didn't sell your options and if on the last few seconds of the day you would be in the money, there would be a hundred thousand dollars in stock in your account due to automatic excercise. Monday morning you would be doing great if up but would have to send them a few thousand by check if your stock went down in the first 10 minutes. Then they would sell.

Watch out on options and generally don't try trading options that expire the same day. My experience is the broker won't allow trading on options late afternoon that expire the same day. Of course if you have millions in cash in your account that doesn't apply.

John Wojtkowski says:

Great info 👍

Darius Rezaei says:

Rip the SQ call…. I commented that last week 😂

Hamed Mahmoodi says:

Thanks Nick for the video. I have a question with credit put spread, can you close the credit before expiration date? I can see in my Robinhood that my put spread is +20 and expires in a week. Can I close it now and if yes I will keep the credit? As far as I understand my maximum gain should be the credit I got at buying then why it says +20? Thanks again.

Luis Garcia says:

Yo buy 68 cent priced call for $ARQL on bullish pattern after earnings call I’m in only 1k looking to gain 50%

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