It's fantastic that you're looking to dive into options trading on Webull! It can be a powerful tool for investing, but it's crucial to understand the ins and outs before you start. This guide will walk you through everything you need to know, step-by-step. Let's get started!
Your Comprehensive Guide to Buying Options on the Webull App
Options trading offers a unique way to speculate on price movements or hedge your existing investments. Webull, with its user-friendly interface and commission-free stock/ETF options, has become a popular platform for many traders. But remember, options are complex and carry significant risks, including the potential to lose 100% or more of your investment. Always educate yourself thoroughly before engaging in live trading.
Step 1: Are You Ready to Trade Options? Let's Find Out!
Before we even touch the Webull app, let's address the most crucial question: Are you prepared for options trading? Options are not like simply buying and selling stocks. They involve concepts like premiums, strike prices, expiration dates, and various strategies that require a solid understanding.
Ask yourself:
Do you understand the basics of call and put options?
Are you comfortable with the concept of leverage and magnified gains/losses?
Do you have a clear trading plan and risk management strategy in place?
Are you prepared to potentially lose your entire investment?
If you're unsure about any of these, I highly recommend spending time on Webull's educational resources, or even using their paper trading feature (which we'll discuss later) to practice without real money.
Step 2: Setting Up Your Webull Account for Options Trading
This step involves ensuring your Webull account is not just open and funded, but also approved for options trading.
2.1 Opening and Funding Your Webull Account
If you don't already have one, the first thing you need is a Webull account.
Download the Webull App: Head to your device's app store (Google Play Store or Apple App Store) and search for "Webull." Download and install the application.
Sign Up: Open the app and follow the on-screen prompts to sign up for a new account. You'll need to provide personal information such as your name, address, Social Security number (for US residents), and employment details.
Fund Your Account: Once your account is open, you'll need to deposit funds. Webull offers various methods, including ACH transfers (which can take a few business days to clear) and wire transfers. There is no minimum deposit required by Webull to start trading. However, you'll need enough capital to cover the cost of your options contracts.
2.2 Applying for Options Trading Privileges
Having a funded Webull account doesn't automatically mean you can trade options. You need to apply for specific options trading privileges.
Navigate to Settings:
Tap on the "Menu" icon (usually located at the bottom right of the Webull app).
Tap on "Settings" (often found under your profile/name).
Look for "Manage Brokerage Account" or a similar option.
Access Options Trading Application:
Within the brokerage account settings, you should find an option for "Options Trading". Tap on it.
You may be asked to enter your Trading Password for security.
Complete the Application:
The application will ask you a series of questions about your financial situation, trading experience, and investment objectives. Be honest and accurate with your answers, as Webull uses this information to determine your eligibility and options trading level.
You'll likely need to affirm that you understand the risks associated with options trading.
Note: In most regions, you must be at least 21 years old to enable options trading on Webull.
Submit and Await Approval: Once you've completed all necessary fields, tap "Submit." Webull will review your application. Approval typically takes 1 to 3 business days, but it might take longer if additional verification is needed. You'll receive a notification via email and within the Webull app once your application is approved.
Step 3: Understanding the Options Chain
Once approved, you'll be able to access the options chain for various underlying assets. This is where you'll find all the available options contracts.
3.1 Navigating to the Options Chain
Search for an Asset: On the Webull app's main screen, use the search bar (usually a magnifying glass icon) to search for the stock, ETF, or index you want to trade options on (e.g., AAPL for Apple).
Select "Options": Once you're on the asset's detail page, you'll see various tabs like "Overview," "Charts," "News," etc. Look for and tap the "Options" tab.
3.2 Deciphering the Options Chain
The options chain might look overwhelming at first, but it's organized logically.
Expiration Dates: At the top of the options chain, you'll see a list of available expiration dates. These dates indicate when the option contract will expire. Shorter-term options are generally more volatile than longer-term options.
Calls and Puts: The options chain is typically divided into two sections:
Calls (Left Side): These give the holder the right to buy the underlying asset at a specific price (strike price) before the expiration date. Buyers of calls are typically bullish on the underlying asset's price movement.
Puts (Right Side): These give the holder the right to sell the underlying asset at a specific price (strike price) before the expiration date. Buyers of puts are typically bearish on the underlying asset's price movement.
Strike Prices: These are listed down the middle of the options chain. The strike price is the predetermined price at which the underlying asset can be bought (for calls) or sold (for puts) if the option is exercised.
Option Premiums (Bid/Ask): For each strike price and expiration date, you'll see bid and ask prices.
The ask price (what you pay to buy an option) is usually higher than the bid price (what you receive to sell an option). The difference is the "spread."
This premium is the cost of the option contract (multiplied by 100, as one option contract typically represents 100 shares).
Step 4: Selecting Your Options Contract
Now that you understand the chain, it's time to choose the specific contract you want to buy. This involves considering your market outlook and risk tolerance.
4.1 Choosing Your Direction: Call or Put?
Bullish Outlook (You expect the price to go up): Consider buying a Call Option. You profit if the underlying asset's price rises above your strike price plus the premium you paid.
Bearish Outlook (You expect the price to go down): Consider buying a Put Option. You profit if the underlying asset's price falls below your strike price minus the premium you paid.
4.2 Selecting an Expiration Date
Shorter-term options (weeks away) are more susceptible to rapid price changes due to time decay (theta) but can offer higher percentage returns if the move is significant.
Longer-term options (months away, also known as LEAPS) decay slower but are more expensive. They give you more time for the underlying asset to move in your favor.
4.3 Deciding on a Strike Price
The strike price plays a crucial role in your potential profit and risk.
In-the-Money (ITM): For calls, the strike price is below the current market price. For puts, the strike price is above the current market price. ITM options are generally more expensive but have intrinsic value.
At-the-Money (ATM): The strike price is very close to the current market price. These options have no intrinsic value but often the most time value.
Out-of-the-Money (OTM): For calls, the strike price is above the current market price. For puts, the strike price is below the current market price. OTM options are cheaper but have no intrinsic value and rely solely on the underlying asset moving past the strike price by expiration. Many beginner traders are drawn to OTM options due to their lower cost, but they have a higher probability of expiring worthless.
Tip: Webull's Options Discover tool can help simplify this process by breaking down strategies and providing built-in analytics, making it more approachable for beginners.
Step 5: Placing Your Order
Once you've identified the specific option contract (e.g., AAPL $180 Call, July 19, 2025 expiration), it's time to place your order.
5.1 Accessing the Order Ticket
From the options chain, tap on the strike price of the call or put option you wish to buy. This will open the order ticket.
5.2 Configuring Your Order
The order ticket will have several fields you need to fill out:
Direction: Make sure "Buy" is selected.
Order Type:
Market Order: Executes immediately at the best available price. This is generally not recommended for options due to potential price volatility and wider bid-ask spreads.
Limit Order: Allows you to specify the maximum price you are willing to pay per contract. This is highly recommended for options trading to control your entry price.
Other advanced order types like Stop-Loss and Take-Profit might also be available for options.
Quantity: This refers to the number of option contracts you want to buy (each contract typically represents 100 shares).
Price (for Limit Orders): Enter the specific price per contract you are willing to pay.
Time-in-Force:
Day: The order will only be active for the current trading day. If it's not filled by market close, it's canceled.
Good-Til-Canceled (GTC): The order remains active until it's filled or you manually cancel it.
5.3 Reviewing and Confirming Your Order
Before submitting, carefully review all the details of your order: the underlying asset, option type (call/put), expiration date, strike price, quantity, order type, and price.
Webull will usually show you an estimated cost for your trade, including any fees. While Webull generally offers commission-free stock and ETF options, there might be small regulatory or exchange fees. For index options, a small contract fee might apply (e.g., $0.50 per contract).
Once you're satisfied, tap the "Buy" or "Place Order" button.
Step 6: Monitoring Your Position
After your order is filled, your option contract will appear in your "Positions" or "Portfolio" section within the Webull app.
Track Performance: Monitor the performance of your option by regularly checking its value against the underlying asset's price movement.
Consider Exiting: You don't have to hold the option until expiration. Many traders buy options to sell them later for a profit before expiration, especially if the underlying asset has moved favorably.
Understanding P&L: Webull will display your real-time profit and loss (P&L) for your open positions.
Step 7: Managing Your Trade (Selling or Exercising)
As your option trade progresses, you'll eventually need to decide how to close your position.
7.1 Selling to Close
This is the most common way to exit an options trade.
Navigate to Your Position: Go to your "Positions" or "Portfolio" in the Webull app.
Select the Option: Tap on the specific option contract you want to sell.
Place a Sell Order: Choose "Sell" as the direction. You can use a limit order to specify your desired selling price.
Confirm: Review the details and confirm the sale. Your profit or loss will be realized upon the sale.
7.2 Exercising the Option (Less Common for Beginners)
Exercising an option means you are fulfilling the terms of the contract.
Call Option Exercise: If you own a call option and exercise it, you will buy 100 shares of the underlying stock at the strike price. You'll need sufficient funds in your account to cover the cost of buying these shares.
Put Option Exercise: If you own a put option and exercise it, you will sell 100 shares of the underlying stock at the strike price. You must own the shares you intend to sell, or your account may be subject to a forced sale or a short position.
Webull will automatically exercise in-the-money options at expiration if you don't take action. However, it's generally recommended for beginners to sell to close their options rather than exercising, as exercising can lead to significant capital requirements or unintended share assignments.
Using Webull's Paper Trading for Practice
Webull offers an excellent paper trading (simulator) feature. This allows you to practice options trading with virtual money in a real-time market environment.
How to Access: Look for the paper trading icon (often a small dollar sign within a square) on the Webull app.
Practice Without Risk: Use this feature to test out different strategies, understand how options prices move, and get comfortable with the order entry process without risking your actual capital.
Unlimited Virtual Cash: You typically start with a substantial amount of virtual money (e.g., $1 million) to practice with.
10 Related FAQ Questions
How to set up a Webull account for options trading?
To set up a Webull account for options trading, first, open a regular brokerage account and fund it. Then, within the Webull app, go to "Menu" > "Settings" > "Manage Brokerage Account" > "Options Trading" and complete the application, providing accurate financial information and trading experience details. Your application will then be reviewed for approval.
How to apply for options trading on Webull?
You can apply for options trading on Webull directly through the app. Navigate to "Menu" -> "Settings" -> "Manage Brokerage Account" -> "Options Trading." Fill out the required questionnaire regarding your financial profile and trading experience, then submit the application for review.
How to understand call options on Webull?
A call option on Webull gives the buyer the right, but not the obligation, to buy 100 shares of an underlying asset at a specified "strike price" before a certain "expiration date." You buy call options if you expect the underlying asset's price to increase.
How to understand put options on Webull?
A put option on Webull gives the buyer the right, but not the obligation, to sell 100 shares of an underlying asset at a specified "strike price" before a certain "expiration date." You buy put options if you expect the underlying asset's price to decrease.
How to read the options chain on Webull?
The Webull options chain displays available options contracts for a given asset. It's typically organized by expiration date at the top, with strike prices in the middle. Call options are usually on one side (e.g., left) and put options on the other (e.g., right), showing the bid and ask prices (premiums) for each contract.
How to choose the right strike price for an option on Webull?
Choosing the right strike price depends on your market outlook and risk tolerance. "In-the-Money" (ITM) options have intrinsic value and are more expensive, "At-the-Money" (ATM) are near the current price and have high time value, and "Out-of-the-Money" (OTM) are cheaper but have no intrinsic value and higher risk of expiring worthless. Consider your price target and time horizon.
How to choose the right expiration date for an option on Webull?
Expiration dates range from a few days to over a year. Shorter-term options are more volatile due to time decay but can offer higher leverage. Longer-term options (LEAPS) decay slower, giving the underlying asset more time to move, but they are more expensive. Your choice should align with your market outlook and trading strategy timeframe.
How to place a limit order for options on Webull?
To place a limit order for options on Webull, after selecting the desired option contract, choose "Limit Order" from the order type options. Then, manually enter the maximum price per contract you are willing to pay in the "Price" field before specifying the "Quantity" of contracts and "Time-in-Force" (e.g., Day or GTC).
How to use paper trading for options on Webull?
Access Webull's paper trading feature by finding its icon in the app. This simulator allows you to practice buying and selling options with virtual money in real-time market conditions. It's an excellent way to test strategies and get comfortable with the options interface without risking actual capital.
How to close an options position on Webull?
To close an options position on Webull, navigate to your "Positions" or "Portfolio" section. Tap on the specific option contract you wish to exit, then select the "Sell" option. You can then place a market order (immediate execution) or a limit order (specify your selling price) to close your position and realize your profit or loss.
