Unlike assets like stocks and bonds, options are contracts that grant the right to buy or sell an underlying asset like a stock or bond at a particular price, known as the strike price. Options contracts also have an expiration date, so if the underlying asset does not surpass the strike price before expiration, it’s considered “out of the money” and expires worthless.
While many people consider options trading a risky business, trading options can actually involve less risk than trading the underlying asset, depending on the particular option strategy used. Options also offer traders considerably more flexibility with respect to potentially profitable strategies than just trading assets like equities alone.
Options allow you to speculate on market direction, hedge existing asset positions or sell covered options against your asset holdings to generate extra income for your portfolio. While using options has considerable advantages to traders familiar with options strategies, they can also involve considerable risk and may not be for everyone.
Since options trading involves taking risk, and traders need to know how to use them successfully, industry regulators stipulate that brokers have an approval procedure in place to allow options trading. In Webull’s case, the broker asks potential options traders using its platform to complete an options trading application to see if they qualify.
If you’ve already been approved for options trading at Webull, then its options trading platform makes it very easy to trade options — even for beginners. Keep reading to find out how to trade options on Webull.
Webull’s options trading platform on a mobile device. Source: Webull.
Step 1: Open a Webull Account
You’ll 1st have to open and fund a Webull account to start trading options. This can be done on your desktop computer or mobile device, and Webull doesn’t require a minimum deposit to open an account.
You can access the broker’s useful paper trading feature to practice trading stocks without depositing funds, although that feature isn’t currently available for practicing options trades, so you will need to find another way to practice. Taking an options trading course can be helpful to novices, for example.
To open a Webull account, you’ll need to enter your email address to receive a verification code and then enter an 8-20 digit password. After you’ve created and logged into your account, Webull directs you to a page where you’ll find information on the additional insurance coverage for clients, as well as details on investor protection for U.S. accounts provided by the Securities Investor Protection Corp. (SIPC).
After registering your account, you can then download Webull’s mobile or desktop computer app. You’ll need at least 320 megabytes of disc storage space on your computer for the desktop application.
Step 2: Log in to the Webull App
You can log in to the Webull app with your email address and password combination. It is also possible to use your phone number if you’ve signed up with a mobile device. You may even qualify to receive a free 3-month subscription to the Webull Level 2 market data service.
After logging into the trading platform, just press the “Unlock Trading” button on the right side of the page. If you’re based in the U.S., you’ll have to validate your identity before you can fund a trading account.
To do that, you can upload photographs of both sides of your driver’s license. If you have no driver’s license, you can still open and fund an account with an Individual Tax Identification Number (ITIN), a valid U.S. passport or a Social Security Number (SSN).
Non-citizen U.S. residents can open and fund an account with an E1, E2 E3, F1, H1B, H3, TN1, O1 or L1 visa.
Step 3: Select Options on the App
To access options trading on the Webull mobile app displayed below, you first navigate to the stocks details page. Then click on the “Options” button on the bottom of the page. You can now select the option you’d like to trade.
Accessing option trading via the Webull mobile app. Source: Webull.
To trade options on the Webull desktop app interface shown below, just select the Stocks icon on the left side column. Then press the tab on the top labeled “Options” when the page for your chosen stock opens. This will then take you to the options chain of the stock you’ve selected.
Option trading interface on the Webull desktop app. Source: Webull
Step 4: Start Trading
Trading options profitably typically requires a good knowledge of the underlying market, as well as which option strategy and time frame suits your market view best. A list of options strategies supported by Webull can be found on their website.
An option’s expiration date and the underlying stock’s price determine whether the option expires worthless or “in the money”. If you expect the stock to remain at or near its current level, you can also use an option strategy like a short straddle or strangle that would gain value over time in a stable market.
The type of strategy you decide to use for trading options depends on whether you’re speculating on a stock’s price, hedging an existing equity position or looking to make extra income on your stock holdings by selling covered call options.
How to Use Charts on Webull
The charting function on Webull’s trading platform lets you track stocks in real time with the standard indicators used by most technical analysts.
Options traders tend to make better trading decisions if they have a solid background in stock market analysis, so you might want to check out Webull’s educational resources on the subject before you start trading options. You can also find a wealth of free articles, tutorials and videos on the Internet about technical analysis and how to use price charts and technical indicators when trading.
Webull’s promotions feature a free share of stock valued between $2.50 and $250 for successfully opening a Webull trading account. The free stock share you receive in either promotion is determined by random selection using Webull’s lottery system.
Companies on the available stock list typically have a capitalization of $2.5 billion and include stocks from the NYSE and the NASDAQ exchanges.
If you open an unfunded account, then you have a 1 in 100 chance of getting a share of Starbucks (NASDAQ:SBUX), Facebook (NYSE:FB) or Snap (NASDAQ:SNAP).
A deposit of $100 or more gives you a share of stock with a value of $8 to $1,600. This includes a 1 in 50 chance of receiving one share of Procter & Gamble (NYSE:PG), Google/Alphabet (NASDAQ: GOOG) or Kraft Heinz (NYSE: KHC).
Benefits of Trading Options in Webull
The benefits of trading options in a Webull account include:
- No commissions
- No contract fees
- No assignment or exercise fees
- Advanced charting and technical indicators
- Easy-to-use cross platform mobile and desktop apps
Webull Commissions and Fees
No commission is charged on option or stock trades. You also pay no fees for exercising or assigning options. Several minimal transaction fees charged by the Securities and Exchange Commission (SEC) and the Financial Regulatory Authority (FINRA) do apply to stock, option and exchange traded funds (ETFs) trades.
Is Webull a Good Platform for Options?
Webull’s trading platforms and options trading interface are intuitive and can be learned quickly by new traders. In addition, Webull has extensive educational resources for traders new to the business.
If you’ve never traded options or if you’re a seasoned professional, Webull offers commission free options and stock trading. The broker also offers excellent educational resources for newer traders.
Frequently Asked Questions
How do options work on Webull?
Options on Webull work in much the same way as with other brokerages. You must first open an account and then be approved for options trading.
How do you get approved for options on Webull?
Approval for options trading at Webull is based on an application you complete that gauges your product knowledge, financial resources, risk tolerance and investment experience. The approval to trade options in eligible accounts can typically be obtained within a couple of business days if you qualify.