A little-known business at Robinhood has exploded, and now it’s launching a service to go after the most serious traders


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Robinhood’s options trading business is exploding, according to Chris O’Neil, a product manager at the California broker.
Now the firm, which has seen $2 billion in options trading volumes since launch, is upping the ante with the roll-out of multi-leg options.
The move shows the company is seriously going after the business of more experienced traders, says Devin Ryan, an analyst at JMP Securities.

When most people think about Robinhood, free stock trading and its red-hot crypto feature typically come to mind.

But Robinhood also has a lesser-known options trading business, which it launched in late 2017, and is growing fast.

The firm has clocked-in over $2 billion in options volumes, making it one of the largest platforms offering exposure to the market, said Chris O’Neil, a product manager at Robinhood responsible for the firm’s options business.

Robinhood is now rolling out multi-leg options, which allow traders to engage in more advanced strategies tied to options.

“We ended up doing it before we thought we would because it was the biggest request from our options users, which put a priority to roll it out,” O’Neil told Business Insider.

Options don’t get the same attention on Main Street as stock trading, but they make up a huge market on Wall Street. An option allows an investor to buy or sell an asset or security — say a stock or a currency — at a certain price at a specified date in the future. Options allow investors to bet on the price of an asset in the future, or to hedge their bets elsewhere against an unexpected price swing. Competitors, such as TDAmeritrade and Fidelity, charge customers more than $4 per contract.

The roll-out of multi-leg options is the latest in Robinhood’s evolution as a company. It made a splash when it said it would dive into crypto trading earlier this year. So far, over 1 million people have signed up for the service. Robinhood also launched a new web platform in November 2017, and also started letting users transfer stock from competing brokerages to its own platform.

The move to support multi-leg options shows the company is seriously going after the business of more experienced traders, says Devin Ryan, an analyst at JMP Securities.

“Active traders are an valuable customer base for the industry and they represent a bigger driver of activity in the more sophisticated products, like multi-leg options, which Robinhood appears to be expanding into,” Ryan said in an email.

In total, the company counts over 4 million registered users. Still, it’s not clear how much money they have with Robinhood. Nor is it clear if the company is profitable.

Robinhood most recently raised $363 million in a Series D round, valuing the company at $5.6 billion in May.

SEE ALSO: Morgan Stanley is using robots to scour its clients’ social media profiles — all to better convince them to not panic when the market goes haywire

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Source:: Business Insider

      

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