The basic steps to buy a call option on Robinhood

To buy a call option on Robinhood, open the app, search for the stock you want, tap the "Trade" button, select "Options," choose "Call," pick your expiration date and strike price, enter the number of contracts, and tap "Buy to Open." Robinhood will show you the current price (the premium) before you confirm. The whole process takes about two minutes once you know which contract you want.

Before you can trade options at all, you need to turn on options trading in your account settings. Go to Account, then Investing, then Options Trading, and select the level of access you want. Robinhood offers Level 1 (calls and puts on stocks you own), Level 2 (calls and puts on any stock), and Level 3 (spreads and other multi-leg strategies). Most people start with Level 2 to buy straightforward calls.

Your account must also have enough cash or buying power to cover the cost. One options contract controls 100 shares, so if a call costs $2 per share, you need $200 in buying power to buy one contract. Robinhood shows this requirement before you confirm the trade.

Key Takeaways

  • You must enable options trading in your account settings before you can buy any call, and Robinhood will ask you to confirm the risk level you want.
  • A call option gives you the right to buy 100 shares at a fixed price (the strike price) before a set date (expiration), and you pay a premium upfront to own that right.
  • The premium you pay is the only money you can lose when you buy a call, unlike buying stock, where losses can be much larger.
  • Robinhood shows the bid-ask spread and current premium price before you confirm, so you can see exactly what you are paying.
  • You can close a call before expiration by selling it back, which is how most traders exit the position rather than holding until the expiration date.

Understanding what a call option actually is

A call option is a contract that gives you the right—but not the obligation—to buy 100 shares of a stock at a specific price (called the strike price) on or before a specific date (called the expiration date). You pay a price upfront to own this right; that price is called the premium.

Think of it like a coupon. If you buy a call option for Apple stock with a $150 strike price expiring in one month, you are paying for the right to buy 100 shares of Apple at $150 each anytime before that month ends. If Apple stock rises to $160, your call is worth at least $1,000 (the difference between $160 and $150, times 100 shares), even though you only paid a few hundred dollars for the contract. If Apple stays below $150, the call expires worthless and you lose the premium you paid.

The maximum you can lose when you buy a call is the premium you paid. You cannot lose more than that, which is different from buying stock outright. This is why calls are sometimes used as a lower-cost way to bet on a stock moving up.

Finding and selecting the right call contract

Once you open the trade screen for a stock, tap "Options" and then "Call." Robinhood shows you a list of available calls organized by expiration date. Each row shows a different strike price, along with the bid price (what buyers will pay), the ask price (what sellers want), and the last price it traded at.

The bid-ask spread is the gap between the bid and ask. A narrow spread (like $0.05) means the option trades frequently and you will get a fair price. A wide spread (like $0.50 or more) means fewer people trade it and you may pay more than you should. Stick to options with tight spreads, especially when you are starting out.

Expiration dates range from days away to months away. Calls expiring sooner are cheaper but lose value faster if the stock does not move. Calls expiring later cost more but give the stock more time to move in your favor. Most beginners start with calls that expire in one to three months.

The strike price you choose depends on how much you think the stock will move. A strike price close to the current stock price (called "at the money") costs more but has a better chance of making money. A strike price well above the current price (called "out of the money") costs less but requires a bigger move to profit.

Entering your order and confirming the trade

After you select a call contract, Robinhood asks how many contracts you want to buy. Enter the number (usually 1 when you are starting) and tap "Buy to Open." This tells Robinhood you are opening a new position, not closing an old one.

Robinhood then shows you a confirmation screen with the strike price, expiration date, premium per share, total cost (premium times 100 times the number of contracts), and your current buying power. Check that everything is correct. The premium shown is the ask price—what you will actually pay.

Tap "Place Order" to send the trade. Robinhood will try to fill it at the ask price or better. If the market is moving fast, the price may change slightly before your order fills, but Robinhood shows you the range it will accept. Once filled, the call appears in your positions list and you own the contract.

What happens after you own the call

Once you own a call, you can watch it in your Positions tab. Robinhood shows the current value (what you could sell it for right now), your gain or loss, and how much time is left until expiration. The value changes throughout the trading day as the stock price moves and as time passes.

Most traders close a call before expiration by selling it back. To do this, go to your position, tap "Trade," select "Call," and then tap "Sell to Close." Robinhood shows you the current bid price (what buyers will pay). If you sell, you lock in your gain or loss and free up your buying power. This is how you exit the trade without waiting for expiration.

If you hold the call all the way to expiration and the stock is above your strike price, Robinhood will automatically exercise it—meaning it will buy 100 shares at your strike price and add them to your account. If the stock is below your strike price at expiration, the call expires worthless and you lose the premium you paid. You do not have to do anything; Robinhood handles it automatically.

Common mistakes to avoid when buying calls

The biggest mistake is buying calls with very wide bid-ask spreads. If the bid is $1.00 and the ask is $1.50, you are paying 50 cents extra just to enter the trade. That money is gone before the stock even moves. Stick to options where the spread is less than 10% of the ask price.

Another mistake is buying calls that expire too soon. A call expiring in three days loses value very quickly if the stock does not move when ready. Beginners often watch their call drop 50% in value in a single day just because time is running out, even if the stock moved in the right direction. Give yourself at least a few weeks.

A third mistake is buying too many contracts at once. If you buy 10 contracts and the stock moves against you, you lose money 10 times as fast. Start with one contract so you can learn how the price moves and how you react to gains and losses.

Finally, do not confuse the bid price with the price you will pay. When you buy, you pay the ask price (or better if you are lucky). When you sell, you receive the bid price (or better). The difference is how market makers make money, and it is a real cost to you.

Frequently Asked Questions

Do I need a certain amount of money in my account to buy calls?

You need enough buying power to cover the premium. One contract costs the premium per share times 100. If a call costs $2 per share, you need $200. Robinhood shows your available buying power before you confirm, so you will know if you have enough.

What is the difference between buying a call and buying the stock itself?

When you buy stock, you own it and can hold it forever. When you buy a call, you own the right to buy stock at a set price for a set time. Calls cost less upfront but expire and become worthless if the stock does not move. Stock does not expire. Calls let you control more shares with less money, but the risk is different.

Can I sell a call before expiration?

Yes. Go to your position, tap Trade, select Call, and tap Sell to Close. You will receive the current bid price. Most traders exit calls this way instead of holding until expiration. You can sell anytime during market hours.

What happens if the stock drops after I buy a call?

The call loses value as the stock drops. You can sell it back for less than you paid (locking in a loss) or hold it and hope the stock recovers before expiration. The maximum you lose is the premium you paid upfront. You cannot lose more than that when you buy a call.

Do I need to have Level 2 options trading, or can I use Level 1?

Level 1 lets you buy calls only on stocks you already own. Level 2 lets you buy calls on any stock. Most people use Level 2 because it is more flexible. You choose the level when you enable options trading in your account settings.