Options trading on Robinhood requires account setup, approval, and a specific sequence of steps in the app

To trade options on Robinhood, you must first request options access through your account settings, wait for approval (which can take minutes to several days), and then use the app's options chain interface to select a contract, choose your order type, and submit. Robinhood offers options on stocks and ETFs, but not on indexes or futures. The platform charges no commission per trade, though the bid-ask spread — the difference between what buyers will pay and what sellers ask — is your actual cost.

Options trading carries real risk. You can lose your entire investment in a single trade, and some strategies allow losses that exceed what you put in. Robinhood's interface is designed for speed, not safety checks, so understanding what you are buying before you click submit is essential.

Key Takeaways

  • You must request options access in your Robinhood account settings and receive approval before you can place any options trade.
  • Robinhood offers four levels of options access, from covered calls only up to spreads and other multi-leg strategies, based on your experience and account size.
  • An options contract represents 100 shares of the underlying stock, so buying one call contract means you control the right to buy 100 shares at the strike price.
  • The bid-ask spread is what you actually pay to enter and exit a trade; Robinhood's zero commission means the spread is your only transaction cost.
  • You can place market orders (filled at the next available price) or limit orders (filled only at your specified price or better), and limit orders are generally safer for options because spreads can be wide.

Requesting and receiving options approval

Open the Robinhood app, tap the account icon, select "Account Settings," then scroll to "Options" and tap "Request Options Access." Robinhood will ask you to confirm your investment experience and knowledge level. The app offers four approval levels: Level 1 (covered calls and cash-secured puts), Level 2 (spreads and other multi-leg strategies), Level 3 (short calls and puts), and Level 4 (spreads on margin). Most new traders receive Level 1 or Level 2 approval automatically if they meet the account requirements.

Approval can be instant or take up to several business days. If you are denied, Robinhood will tell you why — usually because your account balance is below their minimum (typically $2,000 for Level 1, higher for other levels) or because you indicated no prior options experience. You can request again after 30 days or once your account balance meets the threshold.

Understanding the options chain and contract symbols

Once approved, search for a stock or ETF in the Robinhood app and scroll down to the "Options" section. You will see a table called the options chain, which lists all available contracts for that underlying asset. Each row shows a strike price (the price at which you can buy or sell the shares), and columns show call and put contracts for different expiration dates.

A contract symbol tells you everything about that trade: the stock ticker, the expiration date, whether it is a call or put, and the strike price. For example, AAPL 150 C 01/17 means Apple stock, $150 strike, call contract, expiring January 17. You do not need to type this symbol — Robinhood builds it for you when you select the contract from the chain.

The chain shows the bid price (what buyers will pay right now), the ask price (what sellers are asking), and the spread between them. A wide spread means fewer traders are interested in that contract, and you will pay more to enter the trade.

Placing your first options order

Tap the call or put contract you want to trade. Robinhood will open an order screen showing the current bid and ask prices. At the top, select whether you are buying to open (entering a new position) or selling to close (exiting an existing position). Below that, choose your order type: market order or limit order.

A market order fills immediately at the next available price, which could be worse than the bid-ask you see on screen if the market moves fast. A limit order lets you set the exact price you will accept; it will only fill if the market reaches that price. For options, limit orders are usually safer because spreads are often wide and market orders can fill at a much worse price than you expected.

Enter the number of contracts (each contract controls 100 shares), review the estimated cost or credit, and tap "Review Order." Robinhood will show you the order one more time. Tap "Submit Order" to send it to the market. Market orders usually fill within seconds; limit orders may sit unfilled if the price never reaches your limit.

What happens after you place the trade

Once your order fills, Robinhood adds the position to your portfolio. You can see it under the "Positions" tab, showing your entry price, current price, and unrealized gain or loss. Options positions update in real time during market hours (9:30 a.m. to 4 p.m. Eastern, Monday through Friday).

You can close the position at any time by tapping it, selecting "Sell to Close" (for calls and puts you bought) or "Buy to Close" (for calls and puts you sold), and placing a new order. You do not have to hold until expiration. Most traders close winning trades early to lock in profit and avoid the risk of the price moving against them before expiration.

If you hold a contract until expiration and it is in the money (profitable), Robinhood will automatically exercise it — meaning you will buy or sell the underlying shares. For a call, you will buy 100 shares at the strike price; for a put, you will sell 100 shares at the strike price. Make sure you have enough cash or margin to cover this if it happens.

Bid-ask spreads and why they matter

Robinhood charges zero commission per trade, but the bid-ask spread is your real cost. If you buy a call at the ask price and immediately sell at the bid price, you lose the spread. On liquid contracts (those with many buyers and sellers), the spread might be $0.05 or $0.10 per contract. On illiquid contracts, it can be $0.50 or more.

To minimize spread costs, trade options on large, popular stocks like Apple, Tesla, or Microsoft, where spreads are tightest. Avoid options on small-cap stocks or far-out-of-the-money strikes, where spreads widen and your order may not fill at all. Using limit orders instead of market orders also helps: you can set your limit at the midpoint between bid and ask, and if the market moves in your favor, you may fill at a better price.

Common mistakes to avoid

Buying options on illiquid stocks or far-out-of-the-money strikes is the fastest way to lose money. The spread is so wide that you start underwater the moment you buy. Stick to options on stocks with high trading volume.

Holding through expiration without understanding what will happen is another trap. If you buy a call and it expires in the money, you will own 100 shares of the stock at the strike price — whether you wanted to or not. If you do not have the cash, Robinhood will use margin (borrowed money) and charge you interest. Always close positions before expiration if you do not want to own the shares.

Placing market orders on options is risky because the bid-ask spread can be wide and the price can move between when you tap the button and when the order fills. Use limit orders and set your limit at a price you actually want to pay, not at the current ask.

Frequently Asked Questions

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

Yes. Robinhood typically requires $2,000 for Level 1 options access (covered calls and cash-secured puts). Higher levels require higher balances, sometimes $5,000 or more. The exact minimum can vary, so check your account settings after requesting access.

What is the difference between a call and a put?

A call gives you the right to buy 100 shares at the strike price. A put gives you the right to sell 100 shares at the strike price. Calls go up in value when the stock price rises; puts go up when the stock price falls. Most new traders start with calls because they are conceptually simpler.

Can I lose more money than I invested in an options trade?

If you only buy calls or puts, your maximum loss is what you paid for the contract. If you sell calls or puts (which requires higher approval levels), you can lose much more than your initial investment. Selling a naked call, for example, has theoretically unlimited loss because the stock price can rise indefinitely.

Why did my order not fill?

If you placed a limit order, it did not fill because the market price never reached your limit. If you placed a market order, it may not have filled because the contract is illiquid and there were no sellers (for a buy) or buyers (for a sell) at any price. Cancel the order and try a different contract or a higher limit price.

What happens if I do not close my position before expiration?

If your contract expires in the money, Robinhood will automatically exercise it. For a call, you will buy 100 shares at the strike price; for a put, you will sell 100 shares. If you do not have enough cash to buy the shares, Robinhood will use margin and charge interest. Always close positions before expiration if you do not want this to happen.