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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chicago board options exchange female woman trader
A
trader signals an offer in the Standard & Poor’s 500 stock
index options pit at the Chicago Board Options Exchange (CBOE)
following the Federal Open Market Committee meeting on December
12, 2012 in Chicago, Illinois.

Getty
Images


  • 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. 

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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.