Robinhood Adjusts Options Trading Features Following Criticism

As the free stock trading app Robinhood continues to explode in popularity, the platform has also garnered some criticism and scrutiny. This not only includes a 2018 misstep that found that company backtracking on plans for a “Checking & Savings” account but has also continued with the Securities and Exchange Commission reportedly looking into whether the FinTech has properly disclosed to traders the ways that it makes money. Elsewhere, the app has also been seen as a potential danger to inexperienced investors who may get in over their heads. Now, in an effort to address that concern, Robinhood has announced a series of changes involving options trading.

These additions include the introduction of In-App Exercise and Instant Exercise. As these names imply, traders will now be able to exercise options from the app, thus reducing delays and restrictions. Along with these abilities come new safeguards and information, helping ensure that traders are properly meeting their objectives.

On the topic of education, Robinhood says it will also be increasing the requirement necessary to unlock certain advanced options trading features. These revised experience requirements will apply to those wishing to utilize Level 3 options strategies. Not only will customers need to state their investment experience, knowledge, and objectives in order to access these functions but will also need to provide income and other financial data. Meanwhile, the app’s Help Center will add more clarity to articles about certain options trading strategies.

Another change involves Buying Power. Now, if there is an account deficit, the app will provide actions users can take to resolve the issue. Moreover, Robinhood says its support team is fully prepared to answer questions that customers may have about their balances.

The adjustments to Robinhood’s options trading platform come after the tragic death of 20-year-old Alex Kearns in June. According to his family, Kearns committed suicide after his account showed a negative balance of more than $730,000, which was actually the result of his options trades not yet settling. In response, the company laid out a series of plans to address the platform issues while also pledging $250,000 to the American Foundation for Suicide Prevention.

For Robinhood, the continued growth and mainstream recognition have been both a blessing and a curse. On the one hand, they’ve managed to raise tremendous amounts of money as they battle more traditional brokerage firms. However, this popularity has also exposed what some see as flaws inherent to making such investment tools available to all. With that in mind, it seems likely that the platform will continue to evolve in order to address and reduce these issues when possible. If done properly, Robinhood will only grow larger and stronger as a result.


Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded in 2015 to focus on personal finance and the emerging FinTech markets.

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