Options Trading 101: A Step-by-Step Guide to Buying Put Debit Spreads

How to execute short debit spreads aka put debit spreads

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As Schaeffer's Investment Research is not affiliated with Robinhood, this article can only provide general steps on how to buy a put debit spread on Robinhood. However, keep in mind that financial processes and platforms may change over time, so it's always a good idea to double-check with the latest information from Robinhood or consult a financial advisor if you're unsure about any options trading strategy.

Bernie Schaeffer has recently launched two new debit spread trading programs (Vertical Options Trader and Grand Slam Countdown) in which our members can take advantage of the powerful debit spread strategy. Both programs offer call debit spreads and put debit spreads. We will discuss buying put debit spreads here, but you can review how to buy call debit spreads by clicking here.

Here is how to buy a put debit spread (aka a put vertical spread) on Robinhood:

Step 1: Open or Log in to Your Robinhood Account

If you already have a Robinhood account, log in. If not, sign up for a new account and complete the necessary verification processes.
 

Step 2: Access the Trading Screen

Once logged in, click on the "Trade" button to access the trading screen.
 

Step 3: Select the Option Chain

Search for the stock you're interested in trading using the search function or by browsing through available options. Click on the stock to view its trading details, then navigate to the "Options" tab to see the available options for that stock.
 

Step 4: Choose the Put Option

Within the options chain, find the put option you want to use for the debit spread. This will be your "long" put option.
 

Step 5: Select the Strike Price and Expiration Date

After choosing the long put option, pick a specific strike price and expiration date for your put debit spread. The strike price is the price at which you have the right to sell the underlying stock, and the expiration date is when the option contract expires.
 

Step 6: Click on "Trade Options"

Once you've selected the put option and its details (strike price and expiration date), click on the "Trade Options" button.
 

Step 7: Choose "Put Debit Spread" Strategy

On the options trade screen, select "Put Debit Spread" as your desired strategy.
 

Step 8: Enter Quantity and Confirm Order

Specify the number of contracts (options) you want to buy for your put debit spread. Review all the details, including the order summary and associated costs, before confirming your trade.
 

Step 9: Monitor Your Position

After placing the put debit spread trade, you can monitor it from the "Investing" tab in your Robinhood account. Keep track of the trade's performance and be aware of the risks involved in options trading.
 

Please remember that options trading can be complex and risky. It's essential to have a good understanding of the strategy, underlying stock, and the potential risks before proceeding with any options trade. If you're new to options trading or unsure about any aspect of the process, consider seeking advice from a qualified financial advisor.

Learn better through video? Here is a great video that we found on YouTube that will visually walk you through placing a put debit spread on Robinhood:

SIR is not affiliated with any brokerage firm and does not endorse or recommend any specific brokerage firm. SIR is not and will not be responsible for any trades made by a broker on the subscriber's behalf under any circumstances

 

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