What Time do Options on Expire on Robinhood?
Options can be traded on Robinhood, a popular online brokerage platform that offers commission-free trading and fractional shares.
However, trading options on Robinhood has some limitations compared to other brokers, as Robinhood may automatically exercise options early in some cases.
Key Takeaways
Options expire at 4 PM ET on Robinhood, but they will attempt to exercise “at-risk” options starting at 3:30 PM ET
SPY options are tradeable until 4:15 PM ET on Robinhood
According to FINRA, option holders can request to exercise or not exercise options until 5:30 PM ET on the expiration date, but brokers may require it to be earlier
Robinhood will attempt to accommodate exercise requests until 5 PM ET on a best-efforts basis.
Options Expiration Explained
Options expiration is the date and time when an option contract becomes invalid and ceases to exist. The expiration date is determined by the type and strike price of the option contract.
For example, a call option with a strike price of $50 that expires on October 15th gives the buyer the right to buy 100 shares of the underlying stock at $50 per share until 4 PM ET on October 15th.
However, depending on your broker, you can exercise the option until 5:30 PM ET.
Robinhood limits this to 5 PM ET, but to make sure, you should attempt to exercise or close the option by 4 PM ET.
Therefore, option traders need to pay attention to the expiration date and time of their option contracts and decide whether to exercise, sell, or let them expire.
What Time Do Options Expire on Robinhood?
Most option contracts expire at 4 PM ET on the expiration date. However, some option contracts on certain underlying assets can be traded until 4:15 PM ET, such as SPY (SPDR S&P 500 ETF Trust), which tracks the performance of the S&P 500 index.
Robinhood will attempt to exercise any option that is in the money by $0.01 or more at expiration unless you do not have enough buying power or underlying shares or you submit a do not exercise (DNE) request.
An option is in the money if it has intrinsic value, which means that it would be profitable to exercise it. For example, a call option with a strike price of $50 is in the money if the underlying stock is trading above $50 per share.
What is a Do Not Exercise (DNE)
For options traders who do not want to exercise their rights at the time of cash settlement, the ‘Do Not Exercise’ (DNE) facility is a safety measure. It allows a trader to instruct Robinhood if he/she does not wish to exercise the right to give or receive deliveries.
For example, if you have a call option that is in the money but you do not want to buy the underlying shares because of tax implications or other reasons, you can submit a DNE request to Robinhood before 4 PM ET on the expiration date.
You can learn more about in-the-money vs. at-the-money options in our comprehensive article.
How Long After Hours Can You Trade Options?
Options trading is not available after hours on Robinhood, which means that you cannot place any orders for options after the market closes. Any orders that you place after hours will be executed the next trading day when the market opens.
However, some highly liquid ETFs like SPY do trade until 4:15 PM ET, which means that you can trade options on them until then.
Some other brokers may offer futures options, which are options on futures contracts that track commodities or indices. Futures options can trade overnight, depending on the underlying futures contract. However, Robinhood does not offer futures or futures options trading at this time.
When Can You Exercise Your Options?
You can exercise your options at any time before they expire as long as you have enough buying power or underlying shares.
To exercise your options on Robinhood, you can follow these steps:
Navigate to the options position detail screen
Select Exercise
Before expiration day, an early exercise request will be submitted immediately if it’s placed during trading between 9 AM ET and 4 PM ET. Please contact Robinhood before 5 PM ET if you’d like to cancel the exercise request.
If you submit an early exercise request after 4 PM ET, it will be added to the queue for the following trading day. You have until 11:59 PM ET to cancel the pending request.
You cannot request an early exercise in the app or on the web after 4 PM ET on the day of expiration.
Please contact Robinhood to request an exercise request after 4 PM ET. Robinhood will attempt to accommodate exercise requests until 5 PM ET on a best-efforts basis.
If you do not exercise your options before they expire, they will either be exercised automatically by Robinhood (if they are in the money) or expire worthless (if they are out of the money).
What Time Does Robinhood Automatically Close Options?
Robinhood will attempt to close out any expiring, at-risk positions starting at 3:30 PM ET. You can open new 0DTE option positions until 3:30 PM ET on Robinhood.
An at-risk position is an option contract that is close to being in the money or out of the money at expiration. For example, if you have a call option with a strike price of $50 and the underlying stock is trading around $49.50 per share, your option is at risk of being in the money or out of the money by a small margin.
Robinhood will try to sell your option contracts or buy back your short option contracts before they expire, to prevent unwanted exercise or assignment. Exercise or assignment can result in large changes in your portfolio value and margin requirements, which can expose you to additional risks and fees.
However, Robinhood cannot guarantee that it will be able to close out your positions before expiration, especially if the market is volatile or illiquid. Therefore, you should always monitor your options positions and take action before expiration if you do not want to hold them until then.
How to Learn More About Options Trading
We hope that this article has answered your question: what time do options expire on Robinhood, and what happens when they do? Options trading can be a rewarding but complex activity, and it requires a lot of knowledge and skills to succeed.
If you want to learn more about options trading and get hands-on help with trading on the stock market, you can join the HaiKhuu Trading community.
HaiKhuu offers daily morning reports, live trading calls, and will help you hands-on with any questions you may have. You can also access a wealth of resources and tools to improve your trading performance and strategy.
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