How to Trade Options in Webull: Step by Step

Trading options can be a highly rewarding strategy if done correctly. Many beginners struggle with the mechanics and terminology of options trading, especially when using a platform like Webull. This guide walks you through the entire process to trade options in Webull, using real-life examples, helping you understand what options are, how to place orders, manage them, and potentially profit from market moves.

What Are Options?

Before jumping into the Webull platform, it’s essential to understand what options are.

Options are financial contracts that give you the right, but not the obligation, to buy or sell an underlying asset—like a stock—at a predetermined price, called the strike price, on or before a specific expiration date.

There are two primary types of options:

• Call Options: These give the holder the right to buy the underlying asset at the strike price. A call becomes more valuable as the price of the underlying stock rises.
• Put Options: These give the holder the right to sell the underlying asset at the strike price. A put becomes more valuable as the stock’s price declines.

Options provide a flexible tool for hedging, speculation, or generating income, but they also carry risk. That’s why it’s important to start with a clear strategy and understand the platform.

Setting Up Your Options Board in Webull

Webull allows you to create custom watchlists or “boards” tailored to different types of assets. For options trading, you can create a separate board for better organization.

How to Create an Options Board

1. Log into Webull and navigate to your dashboard.
2. Click on the “+” icon to create a new watchlist or board.
3. Name your new board something like “Options” for easy reference.
4. Add the stock you want to trade—e.g., Twitter (TWTR)—to the board by searching for the ticker and clicking Add.

How to Place a Put Option Order in Webull

Let’s walk through placing a put option trade on Twitter (TWTR) stock.

Step 1: Choose the Expiration Date

The expiration date is when the option contract ends. If the market doesn’t move in your favor by this date, the option may expire worthless.

For this example, we select January 20, 2023 as our expiration date to allow enough time for the market to move.

Step 2: Understand the Current Stock Price

Twitter’s current price is $50.58, and it is trending upward by $0.49. We’re anticipating a reversal in trend.

Step 3: Expand the Strike Prices

By default, Webull only shows 10 strike prices. To get more options:

• Click on Strike, then select the number of strike prices you want to view. In our case, selecting 4 offers a better range.

Also read: How to Buy and Sell Stocks and ETFs on Webull

What Is a Strike Price?

The strike price is the price at which the option allows you to buy (call) or sell (put) the stock. If you’re buying a put option with a strike price of $50, you’re betting the stock price will fall below $50 before the expiration date.

Example:

• If Twitter drops to $40, your $50 strike put option allows you to sell shares for $50 while buying them at $40—giving you a $1,000 profit on 100 shares.
• If Twitter remains above $50, the option could expire worthless.

Step 4: Placing the Order

Once you’ve selected your strike price and expiration:

1. Choose your Order Type:
   • Limit (you set your desired price)
   • Market (executes at current price)
2. Set your limit price—let’s say $2.95. Since options are priced per share and each contract represents 100 shares, this costs $295.
3. Review the following:
   • Max Loss: The premium you paid ($295)
   • Break-Even Price: Strike price – premium paid = $47.05
   • Max Profit: If the stock drops to $0, this would be the strike price minus zero, times 100 shares (hypothetical and rare)
4. Click Place Order to execute.

How to Cancel an Option Order in Webull

If your order isn’t filled or you change your mind:

1. Go to your Order Box (below the trading section).
2. Click the three dots next to your pending order.
3. Choose Cancel.

Placing a Second Put Option Order

Let’s try another trade with a strike price of $52.50:

1. Choose Limit Order again.
2. Set your price to $3.25—slightly above the bid price so your order gets filled faster.
3. Submit your order.

Once filled, you now hold a position worth $325. The current value of this option might fluctuate based on market conditions.

How to Close an Option Position in Webull

Closing an option is as important as opening one. To close:

1. Go to your Position List.
2. Right-click on the option.
3. Select Close Order.
4. Choose Limit, Market, or other order types.
5. Submit.

If your option is worth $3.50, and you sell it, you lock in a $25 profit.

However, if you believe the stock will continue to decline, you may choose to hold it longer.

How to Place a Call Option in Webull

Let’s say instead of predicting a drop, you expect Twitter to rise.

Steps:

1. Select a Call Option with a strike price of $51.
2. Set a limit price of, say, $3.15.
3. Submit the order.

If Twitter rises to $70, you’d have the right to buy 100 shares for $51 and sell them for $70, earning a $1,900 profit.

Trading Strategy and Considerations

Many options traders don’t plan to buy or sell the actual shares. Instead, they aim to profit from price fluctuations in the options themselves.

For example:

• If you buy a put option at $3.15 and it rises to $5.00, you can sell and capture the $1.85 gain per share—or $185 total per contract.

But if the price moves against you, you can sell at a loss rather than risk losing the full investment as expiration nears.

Pros and Risks of Trading Options

✅ Pros:

• Leverage: Control 100 shares with a small investment.
• Flexibility: Strategies for bullish, bearish, or sideways markets.
• Defined Risk: Your max loss is the premium paid.

⚠️ Risks:

• Time Decay: Options lose value as expiration nears.
• Volatility: Prices can swing rapidly.
• Total Loss: If your option expires out of the money, you lose your entire investment.

How to Trade Options in Webull – Final Thoughts

Trading options in Webull is accessible, even for beginners, once you understand the basic terminology and strategy. You’ve now learned how to:

• Create a board for options
• Place both put and call orders
• Choose strike prices and expiration dates
• Cancel or close option positions
• Understand the potential profit and risks

Like any investment strategy, options trading requires research, discipline, and patience. But with tools like Webull and a clear understanding of how options work, you can start exploring this powerful financial instrument with confidence.

Disclaimer: This article is for educational purposes only and does not constitute financial advice. Always do your own research or consult with a financial advisor before trading options.