Robinhood Iron Condor or Butterfly Spreads (2025)
Robinhood options spreads trading. Can I buy Straddle, Strangle,
Vertical Butterfly, Condor, Iron Butterfly, Iron Condor and Calendar.
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Robinhood Options Spreads
Robinhood is widely known for its no-commission trading. It was the first platform to offer free trading and continues to focus on providing value. One notable feature is commission-free options spread trading.
Whether you trade stocks, ETFs, or both, options spreads give you greater control over your portfolio.
Robinhood allows traders to access several advanced options spread strategies. These spreads let you capitalize on market movements in any direction—up, down, or sideways.
Read on to find out more about options spread trading with Robinhood.
Options Trading Permissions at Robinhood
To trade options spreads, you need approval for Level 3 Options Permission. This is Robinhood’s highest options trading level, allowing access to its most advanced spread strategies.
Types of Options Spreads Available at Robinhood
Robinhood offers a wide variety of spreads to suit different trading strategies. Whether you want to sell for a credit, use debit spreads to define risk, take advantage of theta decay, or aim for significant payouts with precise predictions, there’s a spread for you.
Here are the spreads you can trade on Robinhood:
- Debit Spreads
- Credit Spreads
- Iron Condors
- Iron Butterflies
- Broken Wing Butterflies
- Unbalanced Butterflies
- Calendar Spreads
- Diagonals
- Butterflies
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How to Place Options Spread Orders on Robinhood
Placing an options spread order on Robinhood is straightforward, though there are some key details to understand.
The most important thing is knowing how your spread is structured. Robinhood doesn’t have a menu for selecting spreads like some other brokers. Instead, advanced options positions are created by selecting individual legs.
Here’s how it works:
Option Spreads Building Blocks
To build spreads, it’s helpful to understand Robinhood’s options chains and order system.
Robinhood’s layout is designed for simplicity. You can choose to buy or sell, as well as between calls and puts. Additionally, you can set the expiration date for each leg of your spread.
Using Robinhood’s “building blocks,” you can create nearly any options spread you want.
Setting Up an Option Spread
To set up an option spread at Robinhood, you can use the “building blocks” to combine long and short calls and puts in various ways. This allows you to create spreads with different levels of complexity.
Start by navigating to the options chain of your chosen stock or ETF.
Begin the process by selecting your desired options from the chain. For this example, we’ll build a debit spread with a same-week expiration, aiming to profit if the stock price moves down.
The stock in this example is currently priced at $280, and we anticipate it dropping to $250 by the end of the week. For this scenario, we’ll use a put debit spread. We’ll buy the spread for a debit, hoping to profit if the stock moves as expected.
First, choose a long put. This can be in-the-money, at-the-money, or out-of-the-money, depending on your risk/reward preference. We’ll use an out-of-the-money long put to keep costs and risks low.
Take note of the Profit and Loss (PnL) calculator for the single option and its price.
Next, select a short put further out-of-the-money. The distance between the long and short puts determines the spread’s profit potential. In this case, we’re selecting an option $10 below the stock price, meaning the maximum profit (if achieved) will be $1000 minus the debit paid for the spread.
Review the expected PnL graph and the updated price for this leg.
Once your spread is set up, decide on the number of contracts, your preferred price, and the Time in Force setting.
Options Trading Margin Requirements
Robinhood doesn’t require a large amount of capital to trade options spreads. As long as you have Level 3 options trading permission, you’re good to go.
You can enable Level 3 options trading with either an Instant Account (basic margin account) or Robinhood Gold.
Fees and Commissions
Robinhood’s zero-commission approach to options trading ensures that creating complex spreads won’t cost extra. It’s one of the few brokers offering this advantage, making it highly appealing to active options traders.
Robinhood Options Spread Trading Pros and Cons
Trading options spreads on Robinhood has its benefits and drawbacks.
Pros
- Creating spreads is simple on Robinhood
- No account minimums are required to start trading
- The theoretical PnL graph makes it easy to visualize potential outcomes
- Wide variety of spreads available
Cons
- Robinhood does not show the expected Market Maker Move (MMM) for options
- Custom spreads can take longer to fill
- You need to understand how spreads are constructed as Robinhood doesn’t automate the process
Updated on 4/28/2025.
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