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How to trade options on Robinhood

4 steps to trade options of Robinhood plus take advantage of basic and advanced options strategies.

Sign up now: Robinhood

  • $0 stock trade fee
  • $0 min. deposit to open
  • Earn 4% interest on uninvested cash with Robinhood Gold
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Robinhood’s trading app was designed for beginner investors with simplicity in mind. However, it also allows for more advanced trading — that includes trading options. Here’s how to trade options on Robinhood in 4 steps:
  1. Sign up for a Robinhood account
  2. Enable options trading on Robinhood
  3. Trade options
  4. Close options trading

1. Sign up for a Robinhood account

If you don’t have a Robinhood account yet, sign up following these steps.

  1. Select the Sign up with Robinhood now button below and provide your name, email address and password.
  2. Enter your phone number and address.
  3. Provide personal information, such as your Social Security number, date of birth and citizenship. You can only sign up if you are a US citizen.
  4. Answer a few questions about investing and provide details about your employment.
  5. Review Robinhood’s agreements and choose whether to fund your account now or later.
Robinhood

Sign up with Robinhood now

  • $0 stock trade fee
  • $0 min. deposit to open
  • Make unlimited commission-free trades, plus earn 4% interest on uninvested cash in your account with Robinhood Gold.

2. Enable options trading on Robinhood

Before you can start trading options on Robinhood, you need to enable options trading. Robinhood will either instantly approve or reject your application depending on the answers you provided and your investment profile. Users are required to have some stock trading experience before they can trade options.
There are two ways to enable options on Robinhood depending on whether you use the web browser or the mobile app.

Enabling options on the web browser

Follow these steps to enable options trading on Robinhood’s web app for desktops:

  1. Log in to your Robinhood account and select Account and then Settings from the navigation menu.
  2. Select Investing from the menu on the left. If you aren’t signed up for options trading, you should see a button labeled Get Options Trading.
  3. Verify your account login credentials.
  4. Select Continue and answer a few qualifying questions. Robinhood requires customers wishing to trade options to disclose investment experience and knowledge and some financial information.
  5. Review your investment profile and your application. Choose Accept when finished.

Enabling options on the mobile app

Follow these steps to enable options trading on mobile:

  1. Log in to your Robinhood account. Then, select the silhouette icon at the bottom of the screen.
  2. Open the hamburger icon in the top left corner and select Investing.
  3. Scroll down, and select Enable Options Trading. Then, select Sign Up.
  4. Answer the necessary qualifying questions and provide information about your option trading experience.
  5. Confirm your investment profile and accept the options agreement.

3. Trade options on Robinhood

Now that you’ve got options trading enabled in your account, you can start trading. Follow these steps to trade options.

  1. Select the magnifying glass to browse securities, and enter the ticker symbol of the stock or ETF with which you want to trade options.
  2. Select Trade [Name] Options to enter the options trading screen. On mobile, select Trade and then Trade Options.
  3. Select an expiration date, and choose either Buy or Sell, and Call or Put.
  4. Select your trade and enter the number of contracts.
  5. Review your order and submit.
A photo of matthewmiczulski

What Matt thinks about options trading

If you don't understand options trading, don't do it. Just like any other investment, get educated and take the time to understand it. Only then will your investment be rational.

— Matt Miczulski, Editor, Investments.

4. Closing options trades

If you don’t want to wait for the expiry date, you can close your trade.

  1. Log in to your account and select the order you want to close.
  2. Select Trade and Close.
  3. Select the number of contracts you want to close.
  4. Review the order and execute your trade.

Robinhood options trading levels

Robinhood has two levels of options trading: Level 2 and Level 3. New options traders will start in Level 2.
Check your options trading level in your Robinhood account details under Settings. If you’re Level 2, you can request to upgrade to Level 3 at any time, but your application may not be approved until you meet Robinhood’s internal eligibility criteria.
We reached out to Robinhood to get an idea of what’s needed to be approved for Level 3. We were told that customers need to go through a manual review process, which includes someone from the Robinhood brokerage operations team reaching out to test your knowledge regarding options trading.

Robinhood strategies for Level-2 investors

Robinhood offers basic options strategies to investors approved for Level 2.

OptionWhat it isWhen to use it
Buying a callBuying the right to buy shares of a stock at strike price before its expiration dateIf you’re bullish on a stock and believe the price will rise
Selling a covered callSelling call options while simultaneously owning an equal number of a stock’s sharesIf you don’t think the stock price will rise in the short term and you want to generate income
Buying a putBuying the right to sell shares of a stock at strike price before an expiration dateIf you’re bearish on a stock and believe the price will fall
Selling a cash-covered putEarning a premium from selling a put and having cash to cover obligation to buy underlying assetIf you want to buy shares of a stock at a low price

Robinhood strategies for Level-3 investors

Options strategies with Level 3 are much more advanced with considerably higher risk. Robinhood requires traders to have some experience trading options before qualifying for Level 3.

OptionWhat it isWhen to use it
Call credit spreads
  • Buying calls at a higher strike price
  • Selling an equal number of calls at a lower strike price
If you think a stock’s underlying price will stay the same or fall before a specific date
Put credit spreadsSelling a put at a higher strike price and buying a put at a lower strike priceIf you think a stock’s underlying price will stay the same or rise before a specific date
Call debit spreadSelling a call at a higher strike price and buying a call at a lower strike priceIf you think a stock will rise even slightly before a specific date
Put debit spreadsBuying a put at a higher strike price and selling a put at a lower strike priceIf you think a stock will fall even slightly before a specific date
Iron condorsCombining two calls and two puts with the same expiration date and different strike pricesIf you think a stock’s price will stay the same
Calendar spreadsBuying long-term options and selling near-term options with the same strike price and different strike datesIf you think a stock’s price will stay the same
Iron butterflyCombining two call credit spreads and two put credit spreads with different strike prices and the same expiration dateIf you think a stock’s price will stay the same

Pros and cons of trading options on Robinhood

  • $0 commission. A draw for investors is Robinhood’s free options trading.
  • Simple user interface. Even beginner investors will find the app easy to navigate.
  • Trade multiple strategies. The app offers the flexibility to trade multiple options at the same time.
  • Limits select stocks. The app landed in trouble in early 2021 for its temporary halt on trading “meme stocks” like GameStop (GME), citing issues with collateral.
  • Limited analytical data. More experienced traders might find Robinhood’s basic education options, customization and filters lacking when compared with competitors like Charles Schwab.
  • Frequent glitches. Robinhood investors report tech issues that hamper trades and account access, including a glitch in January 2020.

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How many American use apps to invest?

On what type of platform do you do the majority of your investing?

Response% of investors
Web browser44%
Mobile app23%
Desktop trading platform33%
Source: Finder survey by Qualtrics of 2,033 Americans, October 2023

While investing apps aren’t the top choice for investors just yet, about one in four (23%) investors say that the use an app for the purposes of investing. Web browsers (44%) and desktop trading (33%) remain the most popular options for investors.

Bottom line

  • Before you start trading options on Robinhood, you need to enable this feature.
  • Robinhood offers two levels of options trading depending on the user’s knowledge — Level 2 and Level 3.
  • Level 3 provides more complex options contracts, which is why enabling Level 3 requires a manual review process.

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