How to trade options on Robinhood in 2024

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:

Sign up for a Robinhood account
Enable options trading on Robinhood
Trade options
Close options trading

1. Sign up for a Robinhood account

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

Select the Sign up with Robinhood now button below and provide your name, email address and password.
Enter your phone number and address.
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.
Answer a few questions about investing and provide details about your employment.
Review Robinhood’s agreements and choose whether to fund your account now or later.

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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:

Log in to your Robinhood account and select Account and then Settings from the navigation menu.
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.
Verify your account login credentials.
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.
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:

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

Dive deeper What is options trading

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.

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

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.

Log in to your account and select the order you want to close.
Select Trade and Close.
Select the number of contracts you want to close.
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.

Option	What it is	When to use it
Buying a call	Buying the right to buy shares of a stock at strike price before its expiration date	If you’re bullish on a stock and believe the price will rise
Selling a covered call	Selling call options while simultaneously owning an equal number of a stock’s shares	If you don’t think the stock price will rise in the short term and you want to generate income
Buying a put	Buying the right to sell shares of a stock at strike price before an expiration date	If you’re bearish on a stock and believe the price will fall
Selling a cash-covered put	Earning a premium from selling a put and having cash to cover obligation to buy underlying asset	If 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.

Option	What it is	When 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 spreads	Selling a put at a higher strike price and buying a put at a lower strike price	If you think a stock’s underlying price will stay the same or rise before a specific date
Call debit spread	Selling a call at a higher strike price and buying a call at a lower strike price	If you think a stock will rise even slightly before a specific date
Put debit spreads	Buying a put at a higher strike price and selling a put at a lower strike price	If you think a stock will fall even slightly before a specific date
Iron condors	Combining two calls and two puts with the same expiration date and different strike prices	If you think a stock’s price will stay the same
Calendar spreads	Buying long-term options and selling near-term options with the same strike price and different strike dates	If you think a stock’s price will stay the same
Iron butterfly	Combining two call credit spreads and two put credit spreads with different strike prices and the same expiration date	If 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.

Compare Robinhood to other trading platforms

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How many American use apps to invest?

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.

Frequently asked questions

You must be approved by Robinhood to enable options trading. This often requires previous stock-trading knowledge and experience.
Similar to any other options trading, you buy or sell options contracts. The buyer of the options contract pays a premium to the seller of the options contract.
Yes as long as Robinhood enables this feature for you.

How to trade options on Robinhood in 2024 | finder.com (2024)