How To Trade Options On Robinhood For Beginners (2026)

Quick Overview

The video provides a beginner's tutorial on how to trade options using the Robinhood app, focusing on the fundamental concepts of call and put options, and demonstrating how to enable Level 2 options trading access.

Key Points: The video serves as a beginner's guide to trading options on Robinhood, emphasizing that options involve significant risk and are not suitable for all investors. Options contracts control 100 shares of an underlying asset and have an expiration date, unlike traditional stock ownership. To trade options, users must enable Level 2 permissions in the Robinhood app settings by navigating through the profile menu and selecting 'Investing'. Call options represent a bullish bet, giving the buyer the right (but not the obligation) to buy the stock at a fixed price before expiration. Put options represent a bearish bet, giving the buyer the right (but not the obligation) to sell the stock at a fixed price before expiration. The cost of an option contract is called the option premium, which is multiplied by 100 to determine the total cost for one contract. The presenter encourages viewers to use Robinhood's Paper Trading simulator (via WeBull, though the video focuses on Robinhood's functionality) to practice risk-free.

Context: This tutorial, titled "How To Trade Options On Robinhood For Beginners (2026)", walks new investors through the initial steps required to begin trading options on the Robinhood platform. The presenter stresses the inherent high risk associated with options, noting that an investor can lose 100% of their investment if the trade expires worthless. The tutorial specifically demonstrates how to navigate the app to enable advanced options trading permissions, which is a prerequisite for executing strategies beyond basic single-leg options.

Detailed Analysis

The presenter begins by issuing a strong warning that options trading involves significant risk, up to losing 100% of the invested capital, and is not appropriate for every investor. He explains that unlike stocks, options are financial contracts tied to an underlying asset with a specific expiration date. To access more complex options trading on Robinhood, users must first enable Level 2 permissions. This is done by accessing the profile icon, tapping the menu (three lines in the top left), selecting 'Investing,' and then finding the 'Options trading' section where Level 2 must be enabled. Once enabled, the presenter demonstrates the Option Strategy Builder interface, showing basic 'Single Leg' strategies (Long Call, Covered Call, Long Put, Cash-Secured Put) and more complex multi-legged strategies like Spreads and Straddles. He then switches to the actual options chain for NVDA (NVIDIA) for the March 20th expiration date, highlighting that contracts with strike prices above the current share price ($184.80 at that time) are 'out of the money' calls, and contracts below the share price are 'in the money' puts. He explains that the premium paid for an option (e.g., the $6.90 premium for the $200 Call) is multiplied by 100 to get the total cost, which is the maximum loss. The maximum profit for buying a call is theoretically unlimited if the stock rises significantly above the strike price plus premium. Conversely, buying a put option provides the right to sell at a fixed price. The presenter strongly recommends using a paper trading simulator, such as the one offered by WeBull (though he is demonstrating Robinhood), to practice before committing real money, due to the high volatility and complexity of options pricing.