Robinhood is launching a free options trading product for its users

• Robinhood, the zero-commission stock broker, has a new sophisticated investment product for its more than 3 million users. 
• The Palo Alto-based company announced Wednesday it would offer free options trading.
• An option is a financial product that gives investors the right to buy or sell a security at a specified price in the future. 

Palo Alto-based Robinhood, a zero-commission stock broker, announced on Wednesday that it would start offering free options trading to its more than 3 million users.

"In 2015, by focusing on technology and automation, we challenged the finance industry with the launch of commission-free equity trading, paving the way for millions of Americans to participate in their own financial system,” said Baiju Bhatt, Robinhood's cofounder and co-CEO, in a press release on the news. “Today, we are doing it again, with commission-free options trading, rooted in the belief that sophisticated investment tools don’t need to be complex or reserved for the wealthy."

Options don't get the same attention on Main Street as stock trading, but they make up a huge market on Wall Street. An option allows an investor to buy or sell an asset or security — say a stock or a currency — at a certain price at a specified date in the future. Options allow investors to bet on the price of an asset in the future, or to hedge their bets elsewhere against an unexpected price swing.

Some of the highlights of the new offering, according to the company, include:

• It's free: "No commission and no per contract fee upon buying or selling options, as well as no exercise or assignment fees."
• Advanced Options Strategies: "Level 2 self-directed options strategies (buying calls and puts, selling covered calls and puts) as well as Level 3 self-directed options strategies such as fixed-risk spreads (credit spreads, iron condors), and other advanced trading strategies are available."
• Pricing Filter: "Robinhood’s proprietary Pricing Filter streamlines the options tables, removing potentially misleading or superfluous information and hides options with little volume or liquidity where you may receive an unfair fill."

The roll-out of free options trading is the latest in Robinhood's evolution as a company. It launched a new web platform in November, and it also started letting users transfer stock from competing brokerages to Robinhood.

The company, which launched in 2012, has been a darling of younger, less experienced stock traders, but it has been recently vying for a more experienced clientele.

In August, Bhatt told Business Insider the company would continue to roll out new features to meet the needs of its users as they mature as investors:

"In time, as our users become more and more sophisticated, we will continue to add features that match them. But we hope to never lose sight of those first timers as well. Fundamentally, that should be the most important thing for financial-services companies. Making the entire industry something that serves the broader market, not just the people who make them a lot of money."

Robinhood is valued at $1.3 billion, according to the company, and has raised over $170 million. The firm has declined to comment on its profitability. 

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