Can the Robinhood App Trade Binary Options

1. Executive Summary

This report addresses the availability of binary options trading on the Robinhood platform. A comprehensive review of Robinhood’s official communications, product listings, support documentation, and regulatory disclosures confirms that the Robinhood app does not offer traditional binary options trading.¹

Robinhood provides commission-free trading access primarily to US-listed stocks, Exchange-Traded Funds (ETFs), and standard options contracts on these securities through its Robinhood Financial LLC entity.¹ Additionally, cryptocurrency trading is offered via a separate entity, Robinhood Crypto LLC.¹

While traditional binary options are absent, Robinhood does offer a distinct product known as “Event Contracts” through Robinhood Derivatives LLC, which is regulated by the Commodity Futures Trading Commission (CFTC).⁵ These contracts feature a binary payout structure ($0 or $1) based on the definitive outcome of specific, real-world events. Robinhood frames these as instruments for speculation within “prediction markets,” differentiating them from gambling.⁵ However, these event contracts, particularly those related to sports, have faced significant regulatory scrutiny and limitations imposed by the CFTC.⁷

Both traditional binary options (which Robinhood does not offer) and the event contracts offered by Robinhood carry substantial risks, including the potential for the complete loss of the invested capital.

related posts : Best Binary OptionS Brokers (in 2025)

2. Overview of Robinhood’s Investment Offerings

Robinhood Markets, Inc., through its various subsidiaries, provides retail investors access to a specific range of financial products, aligning with its stated mission of democratizing finance.¹³ Understanding the scope of these offerings is crucial to determine the availability of specific instruments like binary options.

Supported Asset Classes:

• US Exchange-Listed Stocks and ETFs: Robinhood Financial LLC, the primary brokerage arm, offers trading in a vast number of securities, including over 10,818 US stocks and ETFs listed on major US exchanges.² This core offering is central to Robinhood’s platform and comes with no commission fees, a feature that significantly disrupted the brokerage industry.³
• Standard Options Contracts: Robinhood Financial provides commission-free trading of standard options contracts on US-listed stocks and ETFs.¹ These are conventional options, granting the buyer the right, but not the obligation, to buy (call) or sell (put) the underlying asset at a specified strike price on or before a certain expiration date.¹⁸ Access to options trading is not automatic; users must apply and be approved based on assessments of their trading experience, investment objectives, and financial situation, reflecting the higher risk associated with these instruments.⁷ Robinhood has faced regulatory scrutiny regarding its past approval processes for options trading.⁷
• Cryptocurrencies: Through Robinhood Crypto LLC, a separate entity licensed for virtual currency business activity in states like New York and registered with FinCEN ⁴, users can trade popular cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH), Dogecoin (DOGE), and others, 24/7.¹ Robinhood explicitly discloses that these cryptocurrencies are not securities, are not FDIC insured or SIPC protected, and carry significant risks, including high volatility and potential for large, immediate losses.⁴ The platform emphasizes security measures like holding the majority of customer assets in cold storage.²⁴ Notably, cryptocurrencies cannot be transferred into Robinhood via the Automated Customer Account Transfer Service (ACATS) system used for stocks and options.²⁶
• American Depositary Receipts (ADRs): Robinhood Financial offers access to over 650 ADRs, allowing investment in shares of globally listed companies that trade on US exchanges.²
• Fractional Shares: The platform supports fractional share trading, enabling users to invest in stocks and ETFs with as little as $1, lowering the barrier to entry for owning shares of high-priced companies.³
• IPO Access: Robinhood provides a feature allowing eligible users to participate in Initial Public Offerings (IPOs) at the IPO price, an opportunity traditionally reserved for institutional investors.³
• Event Contracts: Offered through Robinhood Derivatives LLC, these CFTC-regulated contracts allow users to speculate on the binary (Yes/No) outcome of specific, real-world events.⁵ Events have included economic indicators, political elections, and attempted offerings on sports outcomes.⁵ These are discussed in detail in Section 5.
• Futures: Robinhood has expanded into futures trading, also offered via Robinhood Derivatives LLC.¹⁵ This includes contracts on stock indices, energy, currency, metals, and crypto futures.³⁹ Futures trading involves significant risk and requires specific approval.²⁶

Explicitly Unsupported Assets:

Robinhood’s official support documentation is clear about the assets not available for trading through Robinhood Financial. These include:

• Directly traded foreign-domiciled stocks (though ADRs offer indirect access)
• Select Over-the-Counter (OTC) equities
• Preferred stocks
• Mutual funds
• Individual bonds and fixed-income instruments (though bond ETFs are available)
• Foreign exchange (Forex) trading
• Closed-end funds
• Limited partnerships
• Royalty trusts
• Certain specific ADRs and sanctioned securities.²

Crucially, traditional Binary Options are consistently absent from all lists of supported assets across Robinhood’s website, help center, product descriptions, and fee schedules.¹

The pattern of Robinhood’s product offerings reveals a deliberate approach influenced by regulatory frameworks. Initial offerings like stocks, ETFs, and standard options fall primarily under the jurisdiction of the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).¹⁴ The later introduction of futures and event contracts necessitated the establishment of Robinhood Derivatives LLC, a separate entity registered as a Futures Commission Merchant (FCM) with the CFTC.⁵ This structural separation allows Robinhood to operate within distinct regulatory regimes for different product types. The complete absence of traditional binary options, coupled with the well-documented regulatory difficulties and high fraud rates associated with them, particularly in the offshore market ⁴⁵, strongly suggests that Robinhood has intentionally avoided this product category. The introduction of CFTC-regulated event contracts appears to be a strategic alternative, aiming to capture interest in binary-outcome trading while operating within a US regulatory structure, albeit one that is proving contentious.

Table 1: Robinhood Tradable Assets Overview

Asset Class	Available on Robinhood?	Regulating Entity (Typical / Robinhood Specific)	Key Features/Notes	Relevant Snippets
Stocks (US Listed)	Yes	SEC / FINRA (RHF)	Commission-free; Fractional shares available	2
ETFs (US Listed)	Yes	SEC / FINRA (RHF)	Commission-free; Fractional shares available	2
Standard Options (on Stocks/ETFs)	Yes	SEC / FINRA (RHF)	Commission-free; Requires approval; High risk	2
Cryptocurrencies	Yes	State Licenses / FinCEN (RHC)	Not securities, not FDIC/SIPC insured; High volatility/risk; Cold storage emphasized	4
ADRs	Yes	SEC / FINRA (RHF)	Access to >650 global stocks via US exchanges	2
Mutual Funds	No	SEC / FINRA	Not offered	2
Bonds (Individual)	No	SEC / FINRA / MSRB	Not offered (Bond ETFs are available)	2
Forex	No	CFTC / NFA	Not offered	2
Binary Options	No	CFTC (Regulated US) / Often Unregulated Offshore	Not offered by Robinhood. High risk, often associated with fraud.	45
Futures	Yes	CFTC / NFA (RHD)	Offered via Robinhood Derivatives; Requires approval; High risk/leverage	15
Event Contracts	Yes	CFTC / NFA (RHD)	Offered via Robinhood Derivatives; Binary payout ($0/$1); Framed as prediction markets; Subject to regulatory scrutiny; High risk	5

Note: RHF = Robinhood Financial LLC; RHC = Robinhood Crypto LLC; RHD = Robinhood Derivatives LLC.

3. Understanding Binary Options

To definitively assess whether Robinhood offers binary options, it is essential to understand what they are, their associated risks, and their regulatory standing.

Definition and Mechanics:

Binary options are a type of derivative contract whose payoff depends entirely on the outcome of a “Yes” or “No” proposition.⁴⁵ This proposition typically relates to whether the price of an underlying asset (like a stock, commodity, or currency pair) will be above or below a specific price (the strike price) at a predetermined expiration time, or whether a specific event will occur.⁴⁵

The defining characteristic is their “binary” or “all-or-nothing” payout structure.⁷ If the trader’s prediction is correct at expiration (the option finishes “in the money”), they receive a fixed, predetermined payout amount (often settling at $100 per contract on regulated exchanges, or a predefined percentage elsewhere). If the prediction is incorrect (the option finishes “out of the money”), the trader loses their entire investment in that option.⁴⁵ There is no middle ground, and unlike standard options, binary options do not grant the holder the right or potential to own the underlying asset itself; they are purely speculative instruments focused on direction or event occurrence.⁴⁵ Settlement is typically automatic and occurs in cash upon expiration.⁴⁵

Key Risks:

Binary options are widely considered to be extremely high-risk investments.⁷

• All-or-Nothing Payout: The inherent structure means a small adverse movement near expiration can result in a 100% loss on the position. Studies cited in relation to similar products suggest a very high percentage of retail clients lose money trading them.⁷
• Fraud Potential: A major concern highlighted by regulators like the SEC and CFTC is the prevalence of fraud associated with binary options trading platforms, particularly those operating offshore and outside of US regulatory oversight.⁴⁵ Common fraudulent practices include refusing to credit customer accounts, denying fund withdrawals, manipulating trading software, and identity theft.⁴⁵
• Speculative Nature: Often focused on very short-term price movements, binary options trading can resemble gambling more than traditional investing.⁴⁵

Regulatory Status:

The regulatory landscape for binary options is complex and varies globally.

• United States: Binary options are legal in the US, but only if they are traded on exchanges registered with and regulated by either the CFTC or the SEC.⁴⁵ These regulated exchanges are known as Designated Contract Markets (DCMs). Currently, the primary regulated venues offering binary options or very similar products (like event futures) in the US include Nadex (North American Derivatives Exchange, now owned by Crypto.com ³⁴) and Cantor Exchange, LP.⁴⁵ The Chicago Mercantile Exchange (CME) also offers “event futures” with binary outcomes.⁴⁸
• Offshore Platforms: A significant volume of binary options trading accessible online occurs through platforms based outside the US, which are often not registered with or regulated by US authorities.⁴⁵ Trading on these platforms carries substantial risk as they operate without US investor protections.⁴⁶
• International Bans: Due to concerns about investor harm and fraud, binary options have been banned for retail investors in numerous major jurisdictions, including the United Kingdom, the European Union, Canada, and Australia.⁷

The bifurcation between a small, regulated US market and a large, problematic offshore market presents a significant challenge. While the simple structure of binary options might appeal to some retail users, the association with fraud and the stringent warnings from US regulators ⁴⁵ create substantial regulatory and reputational risks for any mainstream US broker considering offering them. This context makes it highly probable that a regulated entity like Robinhood would deliberately avoid the traditional binary options market to mitigate these risks.

4. Binary Options Trading on Robinhood: The Verdict

Based on a thorough examination of available evidence, the conclusion is definitive: the Robinhood platform does not support the trading of traditional binary options.

This conclusion stems from several key observations:

• Absence in Official Documentation: Robinhood’s official website, including its product pages ¹, detailed lists of tradable assets in support articles ², fee schedules ¹, and help center structure ⁴⁴, makes no mention whatsoever of offering binary options. While they detail stocks, ETFs, standard options, crypto, and even newer offerings like event contracts and futures, binary options are conspicuously absent from all official materials.
• Lack of Support in Disclosures: A review of relevant disclosure documents, such as the “Characteristics and Risks of Standardized Options” document provided to options traders ⁵¹, focuses exclusively on standard, exchange-traded options (puts and calls) and does not include information pertinent to binary options. The document referenced when applying for options trading ¹⁸ pertains to these standard options, not binaries.
• Confirmation from Third-Party Sources: Reputable financial news outlets and brokerage review sites (such as Investopedia and NerdWallet) that analyze Robinhood’s platform consistently list its offerings as stocks, ETFs, standard options, and cryptocurrencies.¹⁵ While these sources may discuss binary options in a general financial context ²¹, none indicate that Robinhood facilitates their trading.
• No Mention in Help Center or Support: Searches within Robinhood’s help center ⁴⁴ and examination of support articles related to trading ¹⁹ yield no results or procedures related to executing binary option trades.

In the highly regulated financial services industry, transparency regarding product offerings is paramount. For a publicly traded company like Robinhood ⁴², subject to oversight by multiple regulatory bodies (SEC, FINRA, CFTC), the explicit listing of available products in official documentation and disclosures is standard practice.¹ The consistent and complete omission of “binary options” across all official Robinhood channels is therefore not accidental; it serves as a clear confirmation that this specific product is not part of their offering. The platform’s silence on this matter, within such a regulated context, speaks definitively to its unavailability.

5. Robinhood Event Contracts: A Closer Look

While Robinhood does not offer traditional binary options, it has introduced a product called “Event Contracts” which shares some superficial similarities but operates under a different framework.

Introduction as a Distinct Product:

Robinhood Event Contracts are offered through Robinhood Derivatives LLC (RHD), a wholly-owned subsidiary registered with the CFTC as a Futures Commission Merchant (FCM) and a member of the National Futures Association (NFA).⁵ This structural separation from Robinhood Financial LLC (which handles stocks and standard options) is critical, as it places event contracts and futures under the regulatory purview of the CFTC, distinct from the SEC/FINRA oversight of securities.

Structure and Mechanics:

• Binary Payout: Similar to binary options, event contracts have a binary outcome. They settle at a fixed value, typically $1 per contract, if the trader’s prediction about a specific event outcome (“Yes” or “No”) is correct at expiration. If the prediction is incorrect, the contract settles at $0, resulting in the loss of the premium paid.⁵
• Probability-Based Pricing: The price of an event contract fluctuates between $0.01 and $0.99 before expiration. This price is intended to represent the market’s collective, real-time assessment of the probability that the “Yes” outcome will occur.⁵ For instance, a contract priced at $0.60 suggests a 60% perceived probability of the “Yes” outcome. Robinhood notes that due to potential embedded exchange fees (e.g., $0.01), the sum of the “Yes” and “No” contract prices for the same event might slightly exceed $1 (e.g., $1.01), making the probability representation approximate.⁵ This pricing mechanism, tied to market sentiment and probability, is a key feature distinguishing them from potentially less transparent pricing models in the unregulated binary options space.
• Trading Mechanism: Event contracts on Robinhood are traded via partnered CFTC-regulated exchanges, such as KalshiEX and ForecastEx.⁵ Orders are typically placed as marketable Immediate-or-Cancel (IOC) limit orders, meaning they must execute immediately at the best available price or be canceled.⁵ Users are generally restricted to holding a “Yes” contract for only one side of a given event at any time.⁵
• Fees: Trading event contracts on Robinhood involves multiple potential costs: a commission charged by Robinhood ($0.01 per contract traded), potential fees charged by the executing exchange (often $0.01 per contract), and the bid-ask spread (the difference between buying and selling prices), which can also add to the cost.⁵

Framing as “Prediction Markets”:

Robinhood and its partners deliberately position event contracts as tools for participating in “prediction markets,” emphasizing their use for speculation based on information and probability, or potentially for hedging risks related to real-world events.⁵ This framing is strategically important to differentiate them from “bets” or “gaming,” activities that the CFTC is prohibited from allowing contracts based upon under the Commodity Exchange Act (CEA).⁹ Robinhood highlights potential hedging applications for businesses exposed to political, economic, weather, or even sports outcomes.⁶

Types of Events Covered:

Robinhood has offered or attempted to offer event contracts based on various occurrences, facilitated through its partner exchanges:

• Economic Indicators: e.g., Target Federal Funds Rate.⁵
• Political Outcomes: e.g., Winner of the US Presidential Election.⁵
• Sports Events: e.g., NCAA Basketball Tournaments, Super Bowl winner.⁵ However, sports-related contracts faced significant regulatory pushback from the CFTC.⁸

The availability of specific event contracts is contingent on listings by partner exchanges and, crucially, the absence of regulatory objection from the CFTC.

Comparison with Binary Options and Standard Options:

It is vital to distinguish event contracts from both traditional binary options and standard options:

• Event Contracts vs. Binary Options: Both share a binary ($0 or $1 / All-or-Nothing) payout. However, key differences include:

• Regulation: Robinhood’s event contracts trade on CFTC-regulated US exchanges ⁵, whereas many binary options are found on unregulated offshore platforms.⁴⁵
• Underlying Basis: Event contracts are based on the outcome of specific, often non-financial, real-world events.⁵ Binary options are often based on whether the price of a financial asset (stock, currency) is above or below a certain level at expiration.³¹
• Framing: Event contracts are presented as “prediction market” instruments, potentially for hedging ⁵, while binary options are often marketed simply as speculative wagers.³¹
• Event Contracts vs. Standard Options: These are fundamentally different:

• Value Derivation: Standard options derive their value from the underlying asset’s price, strike price, time to expiration, and implied volatility.²⁰ Event contracts derive value from the perceived probability of a specific event outcome.⁵
• Payout: Standard options have variable profit/loss potential that can significantly exceed the premium paid or lost.²⁰ Event contracts have a fixed $0 or $1 payout.⁵
• Ownership: Standard options provide the right (not obligation) to buy/sell the underlying asset, linking them indirectly to ownership.²⁰ Event contracts offer no path to ownership of any underlying asset.⁶
• Regulation: Standard options on stocks/ETFs are regulated by SEC/FINRA.¹⁴ Event contracts are regulated by the CFTC.⁵

Robinhood’s introduction of event contracts can be viewed as a calculated move. It allows the platform to offer products with the simple, defined-risk appeal similar to binary options, potentially attracting users interested in such structures.⁵ By routing these through CFTC-regulated exchanges and framing them as “prediction markets,” Robinhood attempts to legitimize these offerings within the US regulatory system.⁵ This strategy seeks to capture demand that might otherwise flow to unregulated offshore binary options platforms. However, the CFTC’s intervention, particularly regarding sports contracts ⁸, underscores the fragility of this approach. The regulatory line between a permissible prediction market or hedging tool and a prohibited contract based on “gaming” ⁹ remains a point of contention, making Robinhood’s event contract offerings subject to significant regulatory risk and uncertainty as they test these boundaries.¹²

Table 2: Comparison: Standard Options vs. Event Contracts vs. Binary Options

Feature	Standard Options (Robinhood)	Event Contracts (Robinhood)	Binary Options (General Definition)
Underlying Basis	Price of stock, ETF, index	Outcome of specific event (political, economic, sports, etc.)	Price of asset (stock, forex, commodity) OR event outcome
Payout Structure	Variable profit/loss based on price movement vs. strike	Fixed: $1 if correct, $0 if incorrect	Fixed: Predetermined payout if correct, 0 (total loss) if incorrect
Regulation (Typical US)	SEC / FINRA	CFTC (via regulated exchanges like KalshiEX, ForecastEx)	CFTC (if on regulated US exchange like Nadex); Often Unregulated Offshore
Availability on Robinhood	Yes (via RHF)	Yes (via RHD, subject to regulatory approval/limitations)	No
Key Risks	Leverage risk, time decay, volatility risk, potential large loss	Total loss of premium, liquidity risk, regulatory risk, market risk	Total loss of premium, high fraud risk (offshore), volatility risk
Potential for Ownership	Indirect (right to buy/sell underlying)	None	None
Typical Use Case	Hedging, speculation, income generation	Speculation on event outcomes, potential hedging	Speculation on price direction or event outcome
Fees (Robinhood/Typical)	$0 commission + potential regulatory/exchange fees	$0.01 commission + exchange fee + spread	Varies widely; Can include commission, spread, or embedded fees
Regulatory Body (Robinhood)	SEC / FINRA (RHF)	CFTC / NFA (RHD)	N/A (Not Offered)

Note: RHF = Robinhood Financial LLC; RHD = Robinhood Derivatives LLC.

6. Regulatory Context and Platform Considerations

The types of products a US brokerage like Robinhood can offer are heavily influenced by the regulatory environment. Different products fall under the purview of different agencies, each with its own rules and priorities.

Governing Bodies:

• SEC and FINRA: The Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) oversee Robinhood Financial LLC (RHF), the entity responsible for traditional brokerage services like stock, ETF, and standard options trading.¹⁴ Their mandates focus on investor protection, market integrity, and ensuring fair practices by broker-dealers. Robinhood has faced enforcement actions from FINRA, including a record $70 million fine in 2021 for systemic supervisory failures, including issues related to options account approvals and technology outages.⁷
• CFTC: The Commodity Futures Trading Commission (CFTC) regulates the US derivatives markets, including futures and options on futures. Robinhood Derivatives LLC (RHD), which offers futures and event contracts, is registered with the CFTC as a Futures Commission Merchant (FCM).⁵ The CFTC’s rules include prohibitions against listing contracts based on certain activities deemed contrary to the public interest, such as terrorism, assassination, war, or gaming.⁹
• State Regulators: State securities regulators also have authority and can impose their own rules and enforcement actions. For example, Robinhood settled charges with Massachusetts regulators in 2024 regarding allegations of gamification tactics and encouraging risky trading among inexperienced investors.⁷ Several states have also issued cease and desist orders against platforms offering prediction market contracts, including Robinhood in some cases.³⁴

Regulatory Challenges of Binary Options:

Traditional binary options face significant regulatory headwinds, making them an unattractive product for many regulated US brokers:

• Association with Fraud: The product category is strongly linked to fraudulent offshore operators, leading to numerous warnings from the SEC and CFTC advising investor caution.⁴⁵
• International Bans: Widespread bans in major markets like the EU, UK, and Australia signal regulatory disapproval and highlight perceived investor protection issues.⁷
• “Gaming” Classification Risk: Depending on the structure and underlying, binary options could potentially be classified as “gaming,” putting them in conflict with financial regulations in certain contexts.

Regulatory Scrutiny of Robinhood’s Event Contracts:

Robinhood’s foray into event contracts via its CFTC-regulated subsidiary has encountered notable regulatory friction:

• Political Contracts: While Robinhood offered contracts on the 2024 US Presidential election ⁷, this followed court decisions involving Kalshi that temporarily allowed such contracts despite prior CFTC prohibitions against similar products (e.g., Nadex in 2012).²⁷ Concerns persisted regarding the suitability of election betting for retail investors and potential market manipulation.⁷
• Sports Contracts: Robinhood’s attempt to launch event contracts based on the Super Bowl outcome in early 2025 was swiftly halted by a formal request from the CFTC.⁸ The CFTC initiated reviews of similar sports contracts offered by other platforms like Crypto.com/Nadex.⁵⁰ The central issue revolves around whether these contracts constitute prohibited “gaming” under the Commodity Exchange Act, or if they serve a legitimate economic purpose like hedging, as proponents argue.⁹ Industry groups like the American Gaming Association have opposed these contracts, viewing them as an unregulated form of sports betting.⁸
• Ongoing Regulatory Debate: The CFTC is actively grappling with how to regulate event contracts and prediction markets. It has held industry roundtables and is considering proposed rules that could further define or restrict these products.⁸ Robinhood is actively participating in this process, advocating for a regulatory framework that allows for innovation while ensuring market integrity.¹²

Platform Considerations (Why Robinhood Likely Avoids Binary Options):

Given this context, several factors likely contribute to Robinhood’s decision not to offer traditional binary options:

• Regulatory Risk Mitigation: The well-established issues surrounding fraud, lack of regulation in much of the market, and international bans make traditional binary options a high-risk area from a compliance perspective.⁴⁵ Avoiding them sidesteps these known problems.
• Reputational Protection: Associating the Robinhood brand with a product category notorious for scams and high retail losses could be damaging, particularly given the company’s past public controversies and regulatory fines.⁷
• Compliance Complexity: Building and maintaining a compliant framework for traditional binary options might be more complex and costly than leveraging the existing (though contested) CFTC structure for event contracts offered through RHD.
• Strategic Direction: Robinhood appears focused on expanding its offerings within established US regulatory frameworks (SEC/FINRA for RHF, CFTC for RHD) rather than venturing into the legally ambiguous and reputationally challenged space of traditional binary options.

Regulation acts as both a barrier and a potential competitive advantage for Robinhood. By avoiding the well-known pitfalls of traditional binary options ⁴⁵, the company reduces certain regulatory and reputational risks. Establishing RHD under CFTC oversight provides a pathway for offering derivatives like futures and event contracts.⁵ However, the CFTC’s active scrutiny and intervention regarding event contracts demonstrate that regulation is also a significant operational hurdle.⁸ Robinhood’s ability to innovate and offer these novel binary-outcome products is directly constrained by regulatory interpretation and approval, making the evolving regulatory landscape a critical factor shaping its product strategy and market position.¹²

7. Conclusion and Key Takeaways

The central finding of this analysis is unequivocal: Robinhood does not offer traditional binary options trading on its platform. A thorough review of the company’s official product listings, support documentation, disclosures, and third-party analyses confirms their absence.

Instead of binary options, Robinhood provides access to Event Contracts through its subsidiary, Robinhood Derivatives LLC, which operates under CFTC regulation. While these event contracts share the characteristic binary payout structure ($0 or $1) based on a “Yes/No” outcome, they are distinct products. They are framed as instruments within “prediction markets,” allowing speculation on the outcome of specific real-world events (economic, political, and formerly sports-related).

It is crucial for users to understand that event contracts carry significant risks, similar in potential impact to binary options. The all-or-nothing payout means the entire amount paid for the contract can be lost.⁵ Concerns have been raised about the suitability of such products, particularly for inexperienced retail investors drawn to their apparent simplicity.⁷

Furthermore, the regulatory environment for event contracts is dynamic and uncertain. The CFTC is actively defining the line between permissible event contracts (potentially used for hedging or price discovery) and those based on prohibited activities like “gaming”.⁸ This ongoing regulatory scrutiny directly impacts the types of event contracts Robinhood can offer, as evidenced by the forced withdrawal of sports-related contracts.⁸

Investors considering trading on Robinhood should be aware that while the platform offers commission-free access to stocks, ETFs, and standard options, it does not provide traditional binary options. Users interested in binary-outcome trading might explore Robinhood’s event contracts, but must do so with extreme caution, fully understanding their mechanics, high risks, fee structures, and the uncertain regulatory landscape. Utilizing Robinhood’s educational resources ³ and carefully reviewing all risk disclosures ³ before engaging with complex derivatives like standard options or event contracts is strongly advised.

Download PDF

Works cited

1. Robinhood: 24/5 Commission-Free Stock Trading & Investing, accessed April 21, 2025, https://robinhood.com/
2. Investments you can make on Robinhood, accessed April 21, 2025, https://robinhood.com/support/articles/investments-you-can-make-on-robinhood/
3. Start Trading & Investing with Robinhood App (First Stock is on us), accessed April 21, 2025, https://robinhood.com/us/en/invest/
4. Crypto trading – Robinhood, accessed April 21, 2025, https://robinhood.com/support/articles/no-commission-crypto/
5. Robinhood event contracts, accessed April 21, 2025, https://robinhood.com/us/en/support/articles/robinhood-event-contracts/
6. Prediction Markets Memo – Robinhood, accessed April 21, 2025, https://cdn.robinhood.com/assets/robinhood/legal/prediction_markets_memo.pdf
7. Casten-Merkley Letter to Robinhood on Election Betting, accessed April 21, 2025, https://casten.house.gov/download/casten-merkley-letter-to-robinhood-on-election-betting
8. You can now make March Madness bets on Robinhood. Will regulators allow sports contracts at more brokerages? | Morningstar, accessed April 21, 2025, https://www.morningstar.com/news/marketwatch/20250320236/you-can-now-make-march-madness-bets-on-robinhood-will-regulators-allow-sports-contracts-at-more-brokerages
9. Fumbling the Ball: Why the CFTC Should Sack Super Bowl Gambling Contracts, accessed April 21, 2025, https://www.cftc.gov/media/11801/BetterMarkets_FactSheet_CFTC_SB_Event_Contracts021825/download
10. CFTC Asks Robinhood to Take Sports Event Contracts Offline – SBC Americas, accessed April 21, 2025, https://sbcamericas.com/2025/02/05/robinhood-halts-sports-contracts-cftc/
11. Robinhood pulls Super Bowl contracts after CFTC steps in – NEXT.io, accessed April 21, 2025, https://next.io/news/regulation/robinhood-pulls-super-bowl-contracts/
12. Robinhood Receives Formal Request from the CFTC to Roll Back the Pro Football Championship Market, accessed April 21, 2025, https://newsroom.aboutrobinhood.com/robinhood-receives-formal-request-from-the-cftc-to-roll-back-the-pro-football-championship-market/
13. About Us | Robinhood, accessed April 21, 2025, https://robinhood.com/us/en/about-us/
14. May 9, 2022 Via E-Mail to [email protected] Jennifer Piorko Mitchell Office of the Corporate Secretary FINRA 1735 K Street, NW W, accessed April 21, 2025, https://www.finra.org/sites/default/files/NoticeComment/Robinhood_Steve%20Quirk_5.9.2022_Comment%20Letter%20FINRA%2022-08.pdf
15. Robinhood Review – Investopedia, accessed April 21, 2025, https://www.investopedia.com/robinhood-review-4587919
16. 10 Best Brokers for Options Trading of April 2025 – NerdWallet, accessed April 21, 2025, https://www.nerdwallet.com/best/investing/options-trading-brokers
17. Robinhood Review 2025: Pros, Cons and How It Compares – NerdWallet, accessed April 21, 2025, https://www.nerdwallet.com/reviews/investing/brokers/robinhood
18. Stock Options Trading | Robinhood, accessed April 21, 2025, https://robinhood.com/us/en/about/options/
19. Placing an options trade | Robinhood, accessed April 21, 2025, https://robinhood.com/support/articles/placing-an-options-trade/
20. Options Knowledge Center | Robinhood, accessed April 21, 2025, https://robinhood.com/support/articles/options-knowledge-center/
21. Robinhood Introduces Options Trading for Cash Account Holders – Finance Magnates, accessed April 21, 2025, https://www.financemagnates.com/binary-options/robinhood-introduces-options-trading-for-cash-account-holders/
22. Options Trading: Step-by-Step Guide for Beginners – NerdWallet, accessed April 21, 2025, https://www.nerdwallet.com/article/investing/how-to-trade-options
23. Options trading FAQ – Robinhood, accessed April 21, 2025, https://robinhood.com/us/en/support/articles/options-trading-faq/
24. Robinhood Crypto, accessed April 21, 2025, https://robinhood.com/us/en/about/crypto/
25. Crypto availability – Robinhood, accessed April 21, 2025, https://robinhood.com/us/en/support/articles/coin-availability/
26. Transfer your assets in – Robinhood, accessed April 21, 2025, https://robinhood.com/us/en/support/articles/transfer-your-assets-in/
27. What Are Political Futures? – Investopedia, accessed April 21, 2025, https://www.investopedia.com/terms/p/political-futures.asp
28. How to Bet on the 2024 Presidential Election – Investopedia, accessed April 21, 2025, https://www.investopedia.com/how-to-bet-on-the-2024-presidential-election-8737733
29. Elections Betting Pays Off, For Now: Implications for Future Event Contracts | Cleary Gottlieb, accessed April 21, 2025, https://www.clearygottlieb.com/news-and-insights/publication-listing/elections-betting-pays-off-for-now-implications-for-future-event-contracts
30. Cleary Gottlieb Discusses Election Betting and Its Implications for Future Event Contracts, accessed April 21, 2025, https://clsbluesky.law.columbia.edu/2024/11/18/cleary-gottlieb-discusses-election-betting-and-its-implications-for-future-event-contracts/
31. Event Contracts: What They Are and How They Are Used – Investopedia, accessed April 21, 2025, https://www.investopedia.com/events-contracts-8601422
32. Robinhood plows ahead with Sports Betting, adding Event Contracts to its app – FX News Group, accessed April 21, 2025, https://fxnewsgroup.com/forex-news/retail-forex/robinhood-plows-ahead-with-sports-betting-adding-event-contracts-to-its-app/
33. Prediction Markets Memo – Robinhood, accessed April 21, 2025, https://cdn.robinhood.com/assets/robinhood/legal/prediction_markets_memo.pdf?ref=blockhead.co
34. Prediction Markets: What They Are, How They Work and Risks – NerdWallet, accessed April 21, 2025, https://www.nerdwallet.com/article/investing/what-are-prediction-markets
35. Robinhood Ups The Ante On March Madness With New Prediction Markets Hub | Bankrate, accessed April 21, 2025, https://www.bankrate.com/investing/robinhood-bets-big-on-march-madness-with-prediction-markets-hub/
36. Futures & Event Contracts – Robinhood Policy Positions, accessed April 21, 2025, https://policy.aboutrobinhood.com/policy/futures-and-event-contracts/
37. College basketball tournament event contract | Robinhood, accessed April 21, 2025, https://robinhood.com/us/en/support/articles/college-basketball-tournament/
38. Robinhood Derivatives Comment Letter – CFTC Event Contracts Rule Proposal .docx, accessed April 21, 2025, https://comments.cftc.gov/Handlers/PdfHandler.ashx?id=35555
39. Robinhood Futures, accessed April 21, 2025, https://robinhood.com/us/en/about/futures/
40. What’s futures risk management? – Robinhood, accessed April 21, 2025, https://robinhood.com/us/en/learn/articles/futures-risk-management/
41. Robinhood Legend: Advanced Desktop Trading & Analysis, accessed April 21, 2025, https://robinhood.com/us/en/legend/
42. Investor Relations | Robinhood Markets, Inc., accessed April 21, 2025, https://investors.robinhood.com/
43. How to contact support – Robinhood, accessed April 21, 2025, https://robinhood.com/support/articles/how-to-contact-support/
44. Robinhood Support, accessed April 21, 2025, https://robinhood.com/support/
45. Binary Option: Definition, How They Trade, and Example – Investopedia, accessed April 21, 2025, https://www.investopedia.com/terms/b/binary-option.asp
46. Beware of Off-Exchange Binary Options Trades | CFTC, accessed April 21, 2025, https://www.cftc.gov/LearnAndProtect/AdvisoriesAndArticles/beware_of_off_exchange_binary_options.htm
47. Binary Options Strategies You Should Know – Investopedia, accessed April 21, 2025, https://www.investopedia.com/articles/active-trading/052014/binary-options-strategies.asp
48. A Guide to Trading Binary Options in the US – Investopedia, accessed April 21, 2025, https://www.investopedia.com/articles/active-trading/061114/guide-trading-binary-options-us.asp
49. Cash-Settled Options: Definition, How They Work, and Benefits – Investopedia, accessed April 21, 2025, https://www.investopedia.com/terms/c/cash-settled-options.asp
50. CFTC asks Crypto.com to suspend sports contracts amid review – SBC Americas, accessed April 21, 2025, https://sbcamericas.com/2025/01/15/cftc-cryptocom-sports-contracts-review/
51. Characteristics and Risks of Standardized Options | Robinhood, accessed April 21, 2025, https://cdn.robinhood.com/assets/robinhood/legal/Characteristics%20and%20Risks%20of%20Standardized%20Options.pdf
52. Cantor Futures Exchange (CX Futures Exchange): Overview – Investopedia, accessed April 21, 2025, https://www.investopedia.com/terms/c/cantor-futures-exchange.asp
53. 7 Ways to Short Bitcoin – Investopedia, accessed April 21, 2025, https://www.investopedia.com/news/short-bitcoin/
54. Introduction to Binary Options Trading – NerdWallet, accessed April 21, 2025, https://www.nerdwallet.com/article/investing/binary-options-trading
55. Review: Is Robinhood Worth It In 2025? | NerdWallet – YouTube, accessed April 21, 2025, https://www.youtube.com/watch?v=z4tJRnh7I2Y
56. Super Bowl kicks off event market turmoil under new CFTC – CCH Incorporated, accessed April 21, 2025, https://business.cch.com/srd/SP_LP-Super-Bowl_event-contracts_CFTC_02-06-2025_locked.pdf
57. Robinhood events contracts are a bad deal : r/investing – Reddit, accessed April 21, 2025, https://www.reddit.com/r/investing/comments/1gj59yq/robinhood_events_contracts_are_a_bad_deal/
58. Event derivatives – MarketsWiki, A Commonwealth of Market Knowledge, accessed April 21, 2025, https://www.marketswiki.com/wiki/Event_derivatives
59. Event contracts by Robinhood, Interactive Brokers: Trading or betting? Examples, is it safe?, accessed April 21, 2025, https://m.economictimes.com/news/international/us/event-contracts-by-robinhood-interactive-brokers-trading-or-betting-examples-is-it-safe/articleshow/119121947.cms
60. Prediction markets put gambling at center of US election – Opening Bell Daily, accessed April 21, 2025, https://www.openingbelldailynews.com/p/prediction-markets-election-stocks-kalshi-polymarket-robinhood-trump-harris
61. Robinhood pulls sports event contracts after CFTC request – Payment Expert, accessed April 21, 2025, https://paymentexpert.com/2025/02/05/robinhood-sports-event-contracts-cftc/
62. Risk management – Robinhood, accessed April 21, 2025, https://robinhood.com/us/en/learn/articles/risk-management/