HOW TO TRADE OPTIONS ON ROBINHOOD FOR BEGINNERS 2024

Introduction

This tutorial provides a step-by-step guide on how to trade options using the Robinhood app, specifically tailored for beginners. Trading options can be a powerful way to leverage your investments, but it's important to understand the basics and follow a structured approach. By the end of this guide, you will have a clear understanding of how to navigate the Robinhood platform for options trading.

Step 1: Set Up Your Robinhood Account

• Download the Robinhood app from your device's app store.
• Create an account by providing your email address and creating a password.
• Complete the identity verification process by entering your personal information, including your Social Security number and address.
• Fund your account using a bank transfer. Ensure you have sufficient funds to start trading options.

Step 2: Enable Options Trading

• Once logged in, navigate to your account settings by tapping on your profile icon.
• Select "Investing" and then find the option to enable options trading.
• Read and accept any agreements or disclosures related to options trading.
• Confirm your selection to enable options trading on your account.

Step 3: Research Options

• Understand key terminology:
  • Call Option: Gives you the right to buy a stock at a specified price within a certain time frame.
  • Put Option: Gives you the right to sell a stock at a specified price within a certain time frame.
• Use the Robinhood app to research stocks you are interested in trading options on.
• Pay attention to the stock's performance, volatility, and upcoming earnings reports or events that may affect its price.

Step 4: Finding an Options Trade

• Go to the stock you want to trade options on and tap on it.
• Scroll down to the "Options" section to view available options contracts.
• Select the expiration date for the options you want to trade. Shorter expiration dates typically have higher volatility.
• Review the strike prices and choose one based on your analysis and risk tolerance.

Step 5: Placing an Options Trade

• Tap on the option you wish to trade (either call or put).
• Choose the number of contracts you want to buy or sell.
• Review the price of the option and any associated fees.
• Tap on "Review" to confirm the details of your trade.
• Submit your order by tapping "Submit."

Step 6: Monitor Your Trade

• After placing your trade, monitor its performance in the app.
• Keep an eye on the stock price movement and relevant news that may impact your position.
• Decide on exit strategies, whether that means selling the option, exercising it, or letting it expire.

Conclusion

Trading options on Robinhood is accessible for beginners, but it requires careful research and strategy. By following these steps, you can confidently navigate the platform and start trading options. Remember to continuously educate yourself about the market and trading strategies, and consider consulting with a financial advisor to maximize your trading success. Happy trading!