Robinhood (HOOD) has launched options trading for UK customers, in its latest expansion of features available on its platform to investors outside the US.
Options trading has seen increasing interest from retail investors looking for alternatives to classic stock trading, though it is still less widely available in the UK.
This strategy allows investors to buy or sell options. These are financial contracts which give investors the right — but not the obligation — to buy or sell an investment at a predetermined price within a specific time frame.
Their value is derived from that of an underlying asset, such as a stock or index and fall under the under the category of financial instruments known as derivatives.
Jordan Sinclair, president of Robinhood UK, told Yahoo Finance UK in an interview back in December that the platform planned to launch this feature “at the beginning of next year”.
The e-trading platform said in a release on Tuesday that there would be no Robinhood contract fees on orders placed up until 4.59am BST on 17 May 2025. After this period, Robinhood said investors will be able to trade options with a $0.50 contract fee and that other costs also applied.
“There’s multiple use cases for options, that they are really flexible,” Sinclair told Yahoo Finance UK.
Investors typically trade options for three reasons — to hedge against a potential fall in price, generate income from a stock they own, or to speculate on the direction of an investment.
For each of these objectives, there are different options trading strategies.
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The two main types of options that can be used in these strategies are “calls” which allow investors to buy the underlying asset at what is known as the “strike price” until the contract expires. The strike price is the price at which the option can be exercised.
The other main type of option is the “put”, which enables the investor to sell the underlying asset at the strike price.
That is just a starting point and highlights that there is a lot more terminology associated with options trading, which can make it more complicated to understand than traditional ways of investing.
An advantage of options trading is that they can be cheaper than buying an asset outright, as a standard contract represents 100 shares of the underlying stock. Hedging can also offer a type of insurance against investment losses in your portfolio.
However, experts also emphasise the importance of understanding the terminology before getting started and that investors need to be more active in tracking these investments.