How to buy options on Robinhood

To buy options on Robinhood, you first need to enable options trading in your account settings, then select an options contract from the search or watchlist, review the contract details, and place your order. Robinhood requires you to be at least 18 years old and have a funded account; the platform does not require a minimum account balance to trade options, though your account must have enough cash or buying power to cover the contract cost at the time you place the order.

Options contracts on Robinhood are priced per share but sold in lots of 100 shares. A contract that shows a price of $2.50 costs $250 to buy ($2.50 × 100). You can place the order during market hours (9:30 a.m. to 4 p.m. Eastern Time on weekdays when the market is open) or submit it outside those hours for execution when the market opens.

Key Takeaways

  • You must enable options trading in your account settings before you can place any options order, and Robinhood will ask you to confirm your experience level.
  • Options contracts are priced per share but represent 100 shares, so a $2.50 contract costs $250 to purchase.
  • Your account must have enough cash or buying power to cover the full cost of the contract when you place the order.
  • You can trade options during regular market hours (9:30 a.m. to 4 p.m. Eastern Time on weekdays) or place orders outside those hours for next-market-open execution.

Enable options trading in your account settings

Before you can buy any options contract, you must turn on options trading in Robinhood. Open the app or website, go to your Account menu, and select Settings. Look for the Options Trading section and tap or click to enable it.

Robinhood will ask you a series of questions about your investment experience, including how long you have been investing and whether you understand the risks of options. Your answers determine which options strategies Robinhood allows you to use. Level 1 (the most basic) typically allows you to buy call and put options only. Higher levels unlock more complex strategies like spreads and covered calls, but you do not need a higher level just to buy a single call or put option.

Once you confirm your answers, options trading is active on your account. This process usually takes a few minutes, though Robinhood may take up to 24 hours to process your request in some cases.

Search for and select the options contract you want

On the Robinhood home screen, use the search bar to find the stock or exchange-traded fund (ETF) whose options you want to trade. Tap or click on the security to open its detail page.

Scroll down to the Options section. You will see a list of available contracts organized by expiration date. Each row shows the strike price (the price at which you can buy or sell the underlying stock), the type of contract (call or put), the bid price (what buyers are offering), the ask price (what sellers are asking), and the expiration date. A call option gives you the right to buy the stock at the strike price; a put option gives you the right to sell it at the strike price.

Tap or click on the contract you want to buy. Robinhood will open a detail page showing the current bid and ask prices, the Greeks (delta, gamma, theta, vega — measures of how the contract price moves with the stock price and time), and recent trading volume.

Place your order and confirm the details

On the contract detail page, tap or click the Buy button. Robinhood will open an order form where you can set the number of contracts (usually 1 unless you want to buy multiple) and the order type.

For order type, Robinhood offers Market (buy at the current best available price) or Limit (buy only if the price drops to a level you set). Market orders fill faster but may execute at a price slightly higher than the bid you see on screen. Limit orders let you control the price but may not fill if the contract price never reaches your limit.

Review the total cost (number of contracts × 100 × contract price) and confirm that your account has enough buying power. Tap or click Confirm to submit the order. If you placed a market order, it will fill within seconds during market hours. If you placed a limit order, it will sit open until the price hits your limit or the contract expires.

Understand the cost and buying power requirements

Each options contract represents the right to buy or sell 100 shares of the underlying stock. If you buy a call option on Apple stock with a price of $3.50, you pay $350 ($3.50 × 100). Robinhood deducts this amount from your account's cash or buying power at the time the order fills.

If your account does not have enough cash or buying power to cover the full cost, Robinhood will reject the order. Buying power is the total amount you can spend, including cash in your account plus the value of any securities you own that Robinhood allows you to use as collateral (usually 30% of the value of stocks you hold).

If you sell the options contract later at a profit, the proceeds go back into your cash balance. If the contract expires worthless (meaning the stock price never moves in the direction you bet), you lose the full amount you paid for it.

Know when you can trade and what happens at expiration

Robinhood allows you to place options orders during regular market hours (9:30 a.m. to 4 p.m. Eastern Time on weekdays when the U.S. stock market is open) and outside those hours. Orders placed outside market hours will execute when the market opens the next trading day, though the price may be different from what you see when you place the order.

Options contracts have an expiration date, usually a Friday. On the expiration date, if the contract is "in the money" (meaning the stock price is above the strike price for a call, or below it for a put), Robinhood will automatically exercise the contract and you will own 100 shares of the underlying stock. If the contract is "out of the money" (the stock price moved the wrong direction), it expires worthless and you lose your investment. You can sell the contract before expiration to recover some or all of your cost, depending on how the stock price has moved.

Frequently Asked Questions

Do I need a minimum account balance to trade options on Robinhood?

No, Robinhood does not require a minimum account balance. However, your account must have enough cash or buying power to cover the full cost of the contract when you place the order. If you have $500 in your account and want to buy a contract that costs $250, you can do so, but you will not be able to buy a second contract until you have more cash.

What is the difference between a call and a put option?

A call option gives you the right to buy the stock at a set price (the strike price). You buy a call if you think the stock price will go up. A put option gives you the right to sell the stock at the strike price. You buy a put if you think the stock price will go down. Both are bets on the direction of the stock price, not actual ownership of the stock.

Can I sell an options contract before it expires?

Yes. You can sell any options contract you own at any time during market hours by opening the contract detail page and tapping or clicking Sell. The price you receive depends on what buyers are willing to pay at that moment, which changes based on the stock price and how much time is left until expiration. You may sell for a profit, a loss, or break even.

What happens if my options contract expires in the money?

If your call option expires in the money (stock price above the strike price), Robinhood will automatically exercise it and you will own 100 shares of the stock. Your account must have enough buying power to cover the cost of those shares. If your put option expires in the money, Robinhood will sell 100 shares you own at the strike price, or buy 100 shares if you do not own them (putting you in a short position).

Can I trade options outside of market hours?

You can place options orders outside market hours (before 9:30 a.m. or after 4 p.m. Eastern Time), but they will not execute until the market opens. The price may be different from what you see when you place the order because stock prices change overnight and before the market opens.