Robinhood Introduces Options Trading for Cash Account Holders

Robinhood, a major US commission-free stock trading and investing app, announced on Wednesday that options trading in cash accounts is now available on its platform.

Options trading is the trading of instruments that enables a trader to buy or sell a specific security on a said future date and at a stated price.

The trading company noted that all eligible customers can now access options trading once reviewed.

Robinhood’s advanced customers previously could only trade stocks and exchange-traded funds (ETFs).

However, with the development, they can now trade options, Robinhood said, adding that options trading is in great demand from its advanced customers.

One of the regulations by the Financial Industry Regulatory Authority (FINRA), a private American self-regulatory organization, limits the number of day trades customers can make in a margin account to three trades within five business days.

However, Robinhood explained in a blog post published on Wednesday on its website that the rule is no longer applicable to cash accounts holders.

The trading platform operator noted that “options trading in cash accounts is a standard industry offering.”

However, Robinhood emphasized that interested customers will be assessed for eligibility.

“Options trading entails significant risk and is not appropriate for all customers, which is why all interested customers must apply for options access and have their account reviewed to determine if they are qualified,” the company explained.

The Build Up

Robinhood explained that the introduction of options trading for its cash account holders “builds on the work we’ve already done this year to improve their trading experience.”

In May, Robinhood introduced a stock lending programme.

According to a blog post published by the trading platform, the goal of the programme is to promote a 'democratized approach’ to paid securities lending.

In the same month, Robinhood introduced a revamped version of its brokerage cash sweep programme.

According to the company, this programme enables all eligible brokerage customers to earn 1% interest on uninvested cash.

In addition, it helps them earn extra income, Robinhood added.

Earlier in March, Robinhood extended the trading period on its platform by four hours.

The company moved pre-market trading to 7am from 9am Eastern Time (ET). Additionally, it shifted after-trading hours to 8pm from 6pm ET

Robinhood said the move is an important step towards its goal of powering all-hour equities investing on its platform.