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Option Contract Fee Robinhood

Option Contract Fee on Robinhood: Everything You Need to Know

Robinhood is a leading trading platform that has gained considerable popularity among traders worldwide. The platform is known for its commission-free trades and user-friendly interface. However, if you`re an options trader on Robinhood, you may have noticed some charges labeled as “option contract fees.” In this article, we`ll discuss everything you need to know about the option contract fee on Robinhood.

What is an option contract fee?

An option contract fee is a charge incurred when you buy or sell options contracts on Robinhood. Options are financial derivatives that give traders the right, but not the obligation, to buy or sell shares of a particular stock at a specified price and time. When you trade options on Robinhood, you`ll incur an option contract fee of $0.65 per contract.

How does the option contract fee work?

The option contract fee applies to all options trades on Robinhood, regardless of whether you`re buying or selling the contract. That means you`ll incur the fee when you enter an options trade and again when you exit the trade. For example, if you buy five options contracts and then sell them later, you`ll incur ten option contract fees: five fees for opening the trade and five fees for closing the trade.

It`s worth noting that the option contract fee is separate from other fees that may apply when you trade options, such as the Securities and Exchange Commission (SEC) fee and the Options Regulatory Fee (ORF). These fees are charged by the government and regulatory bodies and are passed on to traders by brokers like Robinhood.

How does the option contract fee affect your trading?

The option contract fee may not seem like a lot, but it can add up quickly, especially if you`re an active trader. For example, if you trade ten contracts in a single options trade, you`ll pay $6.50 in option contract fees alone. If you do multiple trades per day, you could end up paying a significant amount in fees over time.

However, it`s important to note that the option contract fee is relatively low compared to what other brokers charge. Some brokers charge as much as $1.50 per contract, which can make a significant dent in your profits. Robinhood`s low option contract fee makes it an attractive platform for traders who trade frequently.

Conclusion

The option contract fee is a charge that applies to all options trades on Robinhood. The fee is $0.65 per contract and applies both when you enter and exit a trade. While the fee may seem negligible at first, it can add up quickly if you`re an active trader. However, Robinhood`s low option contract fee makes it an attractive platform for traders who trade frequently. If you`re an options trader on Robinhood, it`s important to factor in this fee when calculating your profits and losses.