How to Trade Options on Robinhood — Complete Beginner Guide

Robinhood made options trading accessible to millions of people. But accessibility without education is dangerous. The app makes buying a call option as easy as buying a stock — which is exactly the problem. Here is how to use Robinhood for options correctly, what the interface is actually telling you, and where to be careful.

Step-by-Step: Your First Options Trade on Robinhood

1. Enable options: Settings > Investing > Options Trading > Apply. Answer the questionnaire honestly. Most users get Level 2 (buying calls and puts)
2. Find a stock: Search for the stock you want to trade options on. Tap "Trade" then "Trade Options"
3. Choose expiration date: Select a date at least 30 days out. The dates appear across the top
4. Choose call or put: Calls = bullish (stock goes up). Puts = bearish (stock goes down)
5. Select a strike price: Choose one near the current stock price. Green strikes = in-the-money. The number shown is the premium per share
6. Review the order: Check total cost (premium x 100), breakeven price, and max loss
7. Place the order: Use a limit order (set your price) instead of market order (accept whatever price). This prevents overpaying

Reading the Robinhood Options Screen

What You See	What It Means	What to Do
Premium price (e.g., $3.50)	Cost per share. Multiply by 100 for total cost	$3.50 = $350 per contract
Break even	Stock price where you stop losing money at expiration	Check if this is a realistic price target
Chance of profit %	Probability the option is profitable at expiry	Below 30% = high risk, speculative
Max loss	Most you can lose (premium paid)	Never risk more than 2-5% of account
Green/red P&L	Current option value vs what you paid	Green = profit, red = loss if you sell now
Days until expiry	Time remaining	Below 14 days = rapid time decay

Robinhood Options Mistakes

Mistake	What Happens	Prevention
Market orders	You pay the ask price, often higher than shown	Always use limit orders on options
Buying weekly options	90%+ expire worthless. Time decay destroys them	Buy 30-45 days out minimum
No exit plan	Holding until expiry hoping it recovers	Set profit target (50%) and loss limit (50%) before entering
Ignoring breakeven	Stock goes up but not enough to profit	Check breakeven before every trade
Trading illiquid options	Wide bid-ask spread = bad fills	Stick to popular stocks with high options volume
No position sizing	One bad trade wipes out account gains	Limit each trade to 2-5% of account value

What Robinhood Does Not Show You (But Should)

• Greeks (delta, theta, gamma, vega): These tell you how the option price changes with stock movement, time, and volatility. Robinhood shows a simplified version but not the raw numbers
• Implied volatility: Whether the option is expensive or cheap relative to normal pricing. You might buy an overpriced option without knowing
• Volume and open interest: How actively the option is traded. Low volume = wide spreads = bad fills
• IV rank/percentile: Whether current volatility is high or low historically. Important for timing entries

For these advanced metrics, use a free browser-based calculator or open a Thinkorswim paper trading account alongside Robinhood.

Calculate Before You Trade

• Options Profit Calculator — know your P&L before placing the order
• Stock Profit Calculator — compare to buying shares
• Position Size Calculator — size your position correctly