Robinhood to Expand Options Contract Feature to More Traders

(Bloomberg) -- Robinhood Markets Inc. is working to let more traders use a feature for its mobile app that rolls options contracts, a mechanism that allows traders to extend their options.

Options provide the right to buy or sell a stock at a specific price by a future date. They can be lucrative financial instruments for brokerages. At Robinhood, options activity brought in about 61% of the firm's third-quarter trading revenue. Options rolling allows a trader to close out a position and simultaneously open a new one with another date and price.

Work on expanding the feature was discovered in a beta version of the company's iPhone app by developer Steve Moser and shared with Bloomberg.

“Rolling can help you better manage your options strategies,” reads a hidden message within the app. There will also be toggles to learn more about rolling and starting the rolling process. A Robinhood spokeswoman declined to comment.

Shares of the Menlo Park, California-based firm rose 4.7% to $17.92 at 10:29 a.m. in New York. The stock has plunged 53% since its July initial public offering.

The rolling feature was previously made available to some of what are known as Level 3 users who have access to more trading functionality. That tier is a small set of Robinhood's user base. The presence of the feature in the beta code indicates the company is working to expand the tool to more users across its platform.

Previous beta versions of the Robinhood app have hinted at upcoming features such as the gifting of cryptocurrency, spare change investing, the ability to receive direct deposits early and crypto wallet functionality.

Robinhood's options platform drew regulatory scrutiny as retail trading activity surged during the pandemic. In a sweeping settlement this year, the Financial Industry Regulatory Authority accused Robinhood of allowing thousands of customers to trade options in cases where it may have been inappropriate, among other alleged infractions.

Robinhood agreed to pay about $70 million in penalties without admitting wrongdoing. The company has also made some changes to its options trading, including adding a profit-and-loss visualization for options strategies and phone-based support.