How to Use Robinhood to Trade Options

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How to Use Robinhood to Trade Options
How to Use Robinhood to Trade Options

Robinhood is one of the market’s most popular stock trading applications. You can build a superb investing portfolio straight from your iOS or Android smartphone, thanks to commission-free trades and crypto, ETF, and stock choices. Robinhood’s app also includes essential features such as reinvesting dividends in your favorite stocks.

If you want to expand your financial portfolio, you may be interested in learning how to trade options on Robinhood. This guide will show you how.

Step 1. Download the Robinhood App and Set Up Your Account

The first step in trading options with Robinhood is to download the app and set up an account. Please keep in mind that not all states in the United States support Robinhood.

Except for Hawaii, Nevada, New Hampshire, and West Virginia, you may now establish an account in any state, including the District of Columbia. Even if you use a VPN, you will be unable to join up if you reside in one of these states. This is because you will be required to authenticate your identification using your genuine address and bank account.

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The same is true for using Robinhood in a nation where it is not available. If you are traveling, an attempted login in an unsupported country may result in your account being limited, so keep this in mind. Even if you are a US citizen, verify with your current nation of residency if you are outside the US.

Related: The Best Apps for Trading US Stocks While Outside the US

After you’ve downloaded the app, you may begin creating your account. Account creation is fast and simple, requiring just the verification of your identification and the addition of your bank account for deposits and withdrawals.

Download: Robinhood for iOS | Android (Free)

Step 2. Learn How Options Trading Works

If you’re new to Robinhood, you may find that you can’t trade options by default. This is for a good reason: trading options is dangerous, and Robinhood only allows experienced investors to use it. However, Robinhood is one of the finest options trading applications since it is commission-free and allows you to maintain track of the rest of your portfolio without having it divided up.

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Related: The Best Investment Apps for First-Time Beginners

Before making your first trades, Robinhood advises reading the booklet Characteristics and Risks of Standardized Options. This PDF covers the fundamentals of options and how to assess your financial goals. While reading through this PDF before activating your account may seem boring, there is a reason Robinhood encourages it, and several verification questions need basic options trading expertise. If you’re new, this will help you get started.

Step 3. Get Approved for Options Trading

To be accepted for option trading in Robinhood, you must first activate it in your Robinhood preferences. Navigate to Settings > Investing and scroll down to Options. There will be a toggle to enable options trading there.

Robinhood will ask you a few verification questions before enabling selections. This will notify Robinhood that you are capable of making prudent option deals. These questions cover the fundamentals of entering option spreads. Robinhood must also legally verify your job and determine if you work in the financial business.

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Robinhood will verify your information and notify you if you are authorized to trade options once you input it. When your application is granted, your account will be converted to an immediate account rather than a cash account. This implies that you may make quick bank deposits.

Start Trading Options With Robinhood

You will be able to trade options after you have been accepted for options trading. Robinhood makes it simple to trade stocks, ETFs, and options without paying a fee. You’ll be well on your way to making the most of your Robinhood account after you’ve been permitted to trade options.

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