Rounding out its offering on the options trading front, Robinhood rolled out multi-leg options strategies on its platform. In a blog post announcing the new feature, the free stock trading mobile app operator said that multi-leg options strategies improve the options experience for traders and give them more control over their investments. With multi-leg options strategies, users can trade in a single order and monitor the contract commission free.
"There are a lot of strategies ... that options traders need to be successful," said Chris O'Neil, product manager for Robinhood's options business, in an interview with Investopedia. Prior to the multi-leg options strategies launch, traders couldn't easily access these strategies on the platform. "This is a way to solidify our offering," said O'Neil, noting that Robinhood got into the options market in a more robust way in December and that it has had more than $2 billion in options volume since then. "We've seen explosive growth, with options trading growing month over month. More people are choosing Robinhood over competitors, whether it's first-time options traders or someone that has years of experience." The executive noted that Robinhood has lowered the barriers of entry for options trading, including price and complexity, which has contributed to its growth.
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According to Robinhood, multi-leg options strategies have been one of the most requested features by options investors. The new functionality enables users to trade Level 3 strategies such as iron condors, straddles, strangles, call and put debit spreads, and call and put credit spreads more efficiently. Investors can lower their risk with the strategies, which require less capital than they would on competing platforms, Robinhood said. There are no commissions or per contract fees when buying and selling options, nor are there any exercise or assignment fees. Options traders pay up to $6.95 plus $0.75 per contract and up to $19.99 for exercising and assignment.
The launch of multi-leg options strategies comes at a time when business is booming for Robinhood, enabling it to surpass E*TRADE when it comes to accounts. In May, in announcing that it recently raised $363 million in capital, giving it a valuation of $5.6 billion, Robinhood revealed that it has reached more than 4 million users. Meanwhile, E*TRADE Financial Corporation (ETFC) ended the March quarter with 3.7 million brokerage accounts.
In an interview with CNBC at the time, Robinhood's co-founder and co-CEO Baiju Bhatt said that the roll-out of cryptocurrency trading has fueled some of the growth in new customers. The ability to trade bitcoin and ethereum through the mobile trading app is available in 16 states. "I think the rate at which more traditional tech companies are disrupting finance is interesting to see," Bhatt said. "As it stands, we're leading the pack; we're excited about accelerating that."