Trading options on this groundbreaking platform is easy to do. From the moment you begin opening the account, right up to the point of placing your order, Robinhood designed the user experience to be as straightforward as possible. To say that Robinhood revolutionized an industry is an understatement, but competition has increased in recent years. Despite the pressure from competitors, however, Robinhood remains a popular platform for beginning option traders.

How to Trade Options on Robinhood

To get started trading options on Robinhood, you need to open and fund an account. You can download the app to your smartphone or access the sign-up page on a personal computer. The process doesn’t take long, and it helps to have your key information nearby as you complete the following steps.

Step 1: Open a Robinhood account. is intended to be a simple process. When the app was first designed, it was released in an industry that had a lot of room for improvement. Robinhood’s step-by-step account application makes it easy to enter the personal information needed to verify your identity. 

Once you have entered your personal information, you’ll need to provide financial information to establish whether you are investing in a way that is suitable for your circumstances. The app will request information about your bank account balances, your employment status, and the trading or investing strategies you are pursuing. 

Step 2: Fund your Robinhood account: Robinhood’s sign-up procedure includes asking for bank account information through , or other secure connection tools. It makes funding the account simple and quick, so that customers don’t even have to leave the app to get ready for trading.

Step 3: Log in to your Robinhood account. The sign-up process automatically logs you into your Robinhood account once you have completed all the steps. You can also log into the website or the app at any point in time thereafter.

Step 4: Enable option trading. The sign-up application also includes a couple of questions about option trading and what level of permissions you would prefer. If your financial status isn’t strong enough, you may be assessed as too high of a risk for making losses. That means the app will wait until you have made several trades before approving you for option trading. Once you are capable of being approved for options trading, you can enable that function by adjusting your app’s account settings under the Investing tab.  

Step 5: Select options and complete orders. The design of the app’s trading screens is elegant and they are easy to read. The app may feature the simplest presentation of options quote data and order functions out of any of the major brokers. But such simplicity doesn’t always lend itself to clarity. The screens tend to obscure the bid and ask prices for new traders who don’t know to look for them. 

That’s why it is important to research which options you want to trade, and be certain you clearly understand their cost. Once you have thoroughly researched your intended option trade, you’ll find that executing option orders on Robinhood is really very streamlined.  

What You Need to Open a Robinhood Brokerage Account

requires only that you download the app (or sign up online through a web browser) and provide the personal and financial information requested by the brokerage. 

Personal Information

When opening an account with Robinhood, the app takes you through a series of screens that collect personal information. Brokers are legally required to collect the following information:

• Name
• Address
• Citizenship
• Tax ID

The app steps you through a few screens where you can provide this personal information and verify your identity. Note that even though you provide a tax ID such as a Social Security number, this application will not affect your credit score. Once the application has all the personal information required to open your account, it will request that you provide financial information.

Financial Information

Robinhood collects financial information to remain compliant with the Know Your Client (KYC) standards designed to fulfill SEC regulations. Brokers benefit from KYC standards because it helps them assess both the suitability of a customer’s choices and the risk those choices may represent. 

Where options trading is concerned, this becomes very important to the broker. Since some option strategies can end up losing more than the initial trading capital, a broker needs assurance that the customer can make up for any losses that go beyond the initial balance. The typical financial information collected includes:

• Bank account information
• Trading and investing experience
• Employment status
• Job type
• Job industry

Having this information on file not only satisfies legal requirements but also provides Robinhood with an adequate assessment of the risk it may face if a user makes a trade that takes on more liability than their account balance.

The Benefits of Trading on Robinhood

From its founding, Robinhood was intended to democratize finance by making investing more accessible to everyone. The brokerage worked hard to develop a simple and intuitive trading experience on its app. The initial success was so strong that demand for the app necessitated a waiting period for new users early on. Even though a web-based platform is available as well, Robinhood leans into its expertise as a mobile offering, catering to traders who are looking for basic features that are easy to navigate quickly. However, the hallmark of was its groundbreaking model for no trading commissions. The innovative challenge this model brought sent ripples through the industry that have yet to subside. The customer-oriented model also allowed for user-focused features like fractional-share trading and direct cryptocurrency access.  It’s no surprise that even small account holders find Robinhood attractive. They enjoy cash management features and recurring investment functionality, including an innovative cash card that lets users invest rewards earned from purchases. 

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