How To Do Options Trading On Webull

How To Do Options Trading On Webull

Webull, one of the newest online brokers, was founded in 2017 and launched with a mobile app only in May 2018. This mobile first launch was reflective of Webull’s most important target market: millennials. Webull is positioning itself to serve newer and more active traders, and others drawn to a platform offering a broad range of services for free, including no account minimums, commission free trading of stocks/ETFs and their options, and multiple cryptocurrencies. Webull is more geared towards self-directed investors and offers a smaller range of services than its full-service competitors. Webull customers still get a lot for their money. Webull offers a great platform with many useful tools and features as well as competitive margin rates. We will take a detailed look at Webull in order to help you determine if it is the right broker.

Webull was Investopedia’s winner for Best Broker for Low-Cost Options Trading, Best Low-Cost Day Trading Platform, and Best Low-Cost Options Broker in our 2021 Best Online Brokers Review.

KEY TAKEAWAYS

  • Webull does not charge commissions for stock, ETF or option trades. There are no minimum account requirements. Margin trading is available to accounts of $2000 and higher.
  • Webull offers options, stocks, ETFs and cryptocurrencies. This is a smaller selection of assets that Webull offers to better serve younger customers who are more tech-savvy and want information on the move.
  • Webull is simple to use and offers excellent trading functionality. It also has a wide range of tools and functionality, including news and fundamental analysis and stock screeners.
  • Webull is not the broker for people looking for a broader range of products, such as fixed income, mutual funds, or managed accounts. If you are looking for live trading assistance and prefer to work with an investment advisor, then look elsewhere.
  • Fractional cryptocurrency trading is possible in multiple cryptocurrencies including Bitcoin, Dodgecoin and Bitcoin Cash.

Who is Webull for?

Webull is an investment platform that allows investors to trade without commissions and open up new avenues for trading. Webull isn’t a full-service broker. Its customers require a DIY approach to some aspects of portfolio management. Customers at Webull are generally younger than customers at other brokerage firms. Active traders will be attracted to the broker’s free model. In particular, Webull’s free options trading will catch the attention of active options traders because other brokers, even those that have gone to free stock and ETF trades like Schwab, continue to charge commission on each leg of options trades.

Pros

  • No commissions on stocks/ETFs, options, or cryptocurrencies
  • No minimums or fees, easy account setup
  • Free real-time streaming quotes
  • Simple to use platforms that provide excellent content and tools
  • Access to extended hours and pre-market trading

Cons

  • Excess cash does not earn you any income
  • Potential for execution to be halted by payment of order flow
  • Portfolio management tools are limited in number
  • Access to fixed income, mutual funds or foreign exchange is not available.

Pros Explained

  • Everyone wants something for free, and that is exactly what Webull delivers. There is no commission stock or ETF option. Cryptocurrency trading is especially appealing for traders who don’t want their hands tied. Trading strategies are easier to profit from because they have lower implementation costs.
  • The account opening process only takes a few minutes. You will receive account and options trading approval very quickly and it only takes a couple of additional minutes to add your bank account and set up a free ACH transfer. Even though the transfer might not be completed for several days, you will receive purchasing power.
  • Webull provides free streaming quotes and three-month free access to Level 2 Advance quotes. This service is Nasdaq TotalView and provides more information about market depth as well as a deeper range of bids and questions on security. You can also find auction crossing information for all NASDAQ NYSE stocks and regionally listed stocks on NASDAQ Marketplace Center.
  • Webull’s desktop and mobile application platforms are relatively new, so it has a fresh, intuitive design and is easy to use. The applications are packed with helpful tools for trading, especially considering all the tools are free to the user. You can access news and fundamental information about companies through the customizable workstation platform. Charting is available, as well as watchlists, stock screeners, charts, aggregate ratings and aggregate ratings from multiple analyst. Despite all the information, it is organized in a way that makes it easy to use.
  • Webull customers have access to these hours, which is a popular choice for active traders who trade the market during the pre- and/or extended trading hours. Traders can choose whether they want their orders active during the non-regular trading day times.

Cons Explained

  • Customers of Webull do not receive interest on any cash balances. As Webull doesn’t support mutual fund trading, customers can’t proactively invest their unused cash in a money market fund. In today’s low short-term interest rates, this may not seem to be a problem. However, the potential loss of interest on cash could be more apparent if rates rise.
  • Webull can offer trading and all other services for free because it receives payment for order flow (PFOF). This fact may reduce Webull’s price execution quality. This is not a major issue for most traders today, but it may be a problem for day traders or those who rely on execution quality to fill orders quickly and accurately.
  • While Webull provides a lot of helpful tools for traders on its platform, the portfolio management tools are lacking. Webull customers are expected to be self-sufficient in making their own investing/trading decisions. There are no daily or intra-day market letters, and no research or analyst reports on stocks outside of aggregated analyst statistics. Webull does NOT offer financial advisors, recommend portfolios for rebalancing, control over tax lots on sales or offer a dividend-reinvestment program (DRIP). Currently, Webull doesn’t offer fractional equity shares, although the broker has expressed that they plan to add fractional stock shares soon.
  • Webull offers a wide range of stock, ETFs and options, as well as cryptocurrencies. Webull does not offer fixed income investments, mutual funds or international equities, options, or foreign currency offerings. You get what you see.

Usability

Webull is easy to use, with clean and intuitive navigation. Webull has a website, a desktop workstation, and a mobile app that are all similarly well designed. Because they were built so recently, the platforms have a modern look.

The desktop workstation and website are nearly identical, with the same menu and window setup that focuses on a primary set of buttons down the left side of the screen. These buttons launch customizable quote boards, a stock page with a wealth of information on a single stock or ETF, a broad market overview page, a stock screener, a trading screen that is highly customizable on the desktop platform, an account tab showing balances, positions, buying power, performance, risk level related to margin leverage, access to bank transfers into and out of the account, and a dedicated paper trading area. The website has some differences from the workstation. It only supports single-leg options.

The mobile app uses primary features in a way consistent with the website and workstation, but there are design differences to handle the smaller screens the app is used on. The menu buttons on the bottom of the app screen change to be relevant to the content shown at the time. An example of this is the options button, which appears at the bottom to show an individual stock/ETF.

Watchlists can be easily created across all platforms directly from stock screener results. Watchlists also remain consistent between the desktop, web, mobile app, so you don’t need to set these up on multiple platforms. It’s easy to order and traders can customize the trading ticket information, such as share amounts and order type.

Trade Experience

Webull’s workstation is highly customizable, with templates available for trading stocks and ETFs, options trading, day trading, and for cryptocurrency trading. Traders can switch between these different template pages, and can build their own page layouts from scratch through widgets. Each widget contains different information such as news, basics, options, order entry, sales, time, and so forth. The widgets can be combined to save screen space, with the different widgets accessible through marked tabs at the top of the window. You can group widget windows together to ensure that stock entries in one widget will update in all other widgets.

Trading setups allow for highly customizable user experiences, such as hot keys, home page loaded at startup, default stock, option orders and commonly used share quantities. You can do the most customization and flexibility on your workstation. The website did not have all of the trading page templates available on the workstation, and the learning center was not accessible from the website. The system will guide you to different pages when appropriate, such as taking you to the stocks window to see stock-specific information, news, options, charting, and an analyst ratings overview.

It is easy to enter an order through Webull. The order screen can be added to different screens, and the stock order entry screen includes contingency orders for stop loss and/or profit taking levels. Order tickets can be created directly from your account holdings. Simply click on the market bid or offer to automatically add that information to the trade order widget. Trading was also possible directly from the charting program. The chart shows active positions and orders.

Mobile Trade Experience

As mentioned, although there are some minor differences between the website and the workstation, there is a basic consistency across all the platforms. The mobile app has the same basic features as the website and workstation, but there are design differences to handle the smaller screens. The menu buttons adjust to the content screen, so you can access the most important functions you need. Mobile’s charting also shows your open positions and allows trading directly from the chart. Webull’s drawing tools were also easier to use than the mobile charting software of many other brokers. Although the Webull stock screener is not available on the mobile app, you can convert search results from the website or at work into a watchlist which will be synced to the app.

A wide range of offerings

Webull focuses exclusively on U.S. Stock, ETF and U.S.-listed options. Webull offers only personal and IRA accounts within the United States. Although Webull’s product offerings are not as extensive as full-service brokers, they can meet the needs for younger customers who are less interested in fixed income. Unlike many of the full service brokers, Webull offers trading in multiple cryptocurrencies for as little as $1. Webull does not offer traditional forex trading, fixed income, mutual funds, futures or traditional foreign currency trading. Webull investors can trade the following:

  • US Stocks/ETFs, long and short (2,0005 stocks) are currently listed on Webull’s easy-to-borrow list for short sales
  • Stocks and ETFs Listed in the USA
  • Cryptocurrency trading with Bitcoin, Dodgecoin and Bitcoin Cash, Ethereum, Litecoins, ZEC, and XLM
  • Notable: Although New York State is the only US state to not have approved cryptocurrency trading on Webull yet, the company anticipates that it will soon be approved.

Types of Order

Webull offers most of the most popular order types such as market, limit and stop, stop limit, stop limit, trailing stops, and stop limit. There are also specialty orders such as one-cancel-the-other (OCO), one-triggers-an-OCO (OTOCO), and one-triggers-the-other (OTO), allowing traders to setup a conditional order where a filled limit order establishes an OCO attaching both a stop loss and a profit taking level order once the initial position is established. Webull does not offer market-if-touched, market-on-close, or similar orders.

Webull does not offer traders the ability to control tax lots for sales to close long stock positions. Instead, they use the first in and first out (FIFO), methodology. Webull does not offer automated trading, backtesting strategies or the ability to place orders.

Trade Technology

Although Webull’s trading technology may be basic, it can get the job done. Webull reports net price improvement of 0.0056 a share and $1 per options contract. No smart order routing, trading automation, backtesting, or route control are available. That said, this is in keeping with the broker’s bare bones approach to keep costs down.

Costs

Webull is not a low-cost broker but a free broker. They offer commission-free trading in stocks, ETFs and listed options. There is no fee for minimum account requirements or access to their powerful platforms and tools. Webull’s margin rates are also competitive. When we talk about commission free trading, that means Webull does not charge for trades, but they do pass through Securities and Exchange Commission (SEC) transaction fees and various exchange and regulatory fees, which are typically pennies or fractional pennies per contract. These are Webull’s costs:

  • Online trades in equities or ETFs are free of commissions
  • No commissions on exchange traded options
  • There is no commission for cryptocurrency trading
  • Margin can be used for leverage or short sales. Margin rates vary depending on account size. By breakpoint: Under $25K 6.99%; $100K 6.49%; $250K 5.99%; $500K 5.49%; $1MM 4.99%; $3MM 4.49%; and >$3MM 3.99%
  • Money transfers: No charge for ACH Deposits and withdrawals; Wire Transfers are $8 for deposits in the US and $12.5 if international, and $25 for withdrawals in the US and $40 if international
  • Charges for paper statements: confirmations are $2 for each confirm, account statements are $5 a statement; and the prospectus fee is $2.5 per mailing

How this broker makes money for you and from you

With the race towards no commission trading, understanding how brokerage companies generate revenue has become more opaque. Webull is not afraid to tell investors how they make their money, which allows them provide sophisticated trading platforms and zero-fee trading.

  • Payment from Order Flow: Webull clearly wants to be the first to offer no commission trading. Options are now free to trade on Webull. Webull’s pricing page is very clear and states that PFOF is the reason they are able to offer no commission trading. Webull receives an average of $0.00024 per share for its order flow, and an average of $0.525 per options contract; Webull’s price execution improvement averages are $0.0056 per share, and $1 per option contract.
  • Interest on Cash: Webull’s ability to generate income through cash in its traders’ accounts is another important revenue stream. The company doesn’t pay interest on cash balances. Webull keeps the interest earned by Webull if you have cash in your bank account.
  • Stock Lending Program: Webull does offer a stock lending program, sharing the revenue generated with the investor lending the securities. The market demand for your securities determines the interest rate.

Account and Research Amenities

Webull offers a broad array of account information and research amenities, including fundamental data, news, and charting to help traders make informed investment decisions and identify stocks to trade. However, Webull does not provide the types of tools and information available at full-service brokers, such as daily market reports or individual analyst reports or in-depth portfolio analysis tools.

Stock Screener

Webull offers a stock screener. It is available on the website and at the workstation, but not in the mobile app. Although the screener can only be used for stocks, it is simple enough and offers some functionality not offered by other broker screeners. Only the United States, China and Canada can be selected; Webull offers data and charts for US, Honk Kong and Canada markets. However, U.S. account holders have limited access to trading in U.S. market markets. You can choose to filter the U.S. exchanges (NYSE, AMEX and NASDAQ) and you can filter by more that 25 industry sectors, financial data such as EPS and P/E, Dividends and nine pre-set technical indicators, including overbought/oversold, moving average crosses, and overbought/oversold.

Although the technical indicators are simple to use, they are not very comprehensive. We could not screen for stocks that moved beyond 200. Additional filters include a consensus analyst rating of five grades (strong buy/buy, hold/underperform, sell), and whether the stock can be traded with margin. Stocks can’t be screened for socially responsible investing (SRI). You can save a customized search and convert it to a watchlist. Choosing any of the stocks on the search results provides key statistics and financial information and an order window for that stock on the same page.

ETF and Mutual Fund Screener

Webull doesn’t offer ETF screens and does not offer mutual funds.

Option Screener

Webull does not have a screener to identify specific option trade opportunities, but they do have tools to help construct the most common one, two, and four leg option strategies (vertical spreads, straddles/strangles, butterflies/condors, etc.) using a drop-down menu on the option chain table to select the strategy. You can then bring up the payout graph at maturity for the strategy, and use tools to further customize the strategy through different order types or adjusting the width between strike prices in multi-leg strategies.

Fixed Income Screener

Webull does not offer fixed income on their platform.

Charting

Webull built its own charting functionality, and it is a solid offering. Mobile app charting is a bit different than on the web and workstation because of the smaller screen size, but it is very intuitive. Charts can be used to create alerts and order tickets. You can also add analysis such as Bollinger bands(r), moving or exponential moving averages, relative strength index (RSI), average trade range (ATR), multiple stochastics variants, and other commonly-used analysis to your chart. It seems strange that the 50, 100, and 200-period MAs were not included in the six defaults.

Webull is a new web-based trading platform that has made waves in the Forex market. Fumi Technology, a Chinese online holding company, operates Webull. It allows clients to buy and sell a variety of virtual assets such as shares, ETFs and derivatives as well as commodities like gold, dogecoin, and shiba coin. You can also get market commentary and trade alerts from industry experts to help you make informed investment decisions. Investors will need to open a demo account to see how the system works and determine if it is suitable for them.

 

The webull trading app is based on the Java-based software platform that is used for desktop trading platforms. The webull platform allows access to real time quotes of stocks and options as well as to fundamental data such as market depth, price and volume. The webull desktop trading platform is designed for both iOS and android devices and comes loaded with over one million product images and a large variety of media files. To use the webull app, first download the free trial web version and install the webull trading platform on your phone. You can trade anywhere in the world in less than five minutes!

 

With webull, traders can buy and sell securities using real money. This means that webull trading does not require any particular expertise in order to execute trades. The app uses mathematical algorithms and sophisticated algorithms to identify good opportunities and prevent losses. It analyzes market signals and actions and then makes trades. The app alerts traders immediately if it detects that a security’s peak volume is rising. This allows them to take immediate action before the price moves. The best thing about trades is their ability to be customized. Trades can be customized to allow traders to set investment limits, strike amounts, and stop loss types. This allows them to set custom or automatic limits at the time they feel the investment is at risk.

 

Webull requires a minimum deposit to trade. The maximum amount is unlimited. After investors have created an account at webull, they are able to deposit funds into that account. Traders can start either holding a ‘buy’ or’sell’ option, and they are able to do transactions in two ways – using cash transactions or using credit card transfers. Using credit cards is recommended for smaller investments because there are more transfer fees.

 

Many people asked us why they should use webull instead of traditional trading platforms. We can tell them that webull allows investors to conduct two types of transactions – buying and selling. Traditional trading requires that you wait until the end to complete a transaction. This will be reflected in your profit or loss statement. With webull, you can determine the time when you want to do a transaction, and this will be reflected in your trading Profit and Loss Statement. Additionally, trading with webull will allow you to set a limit to the amount of money you are willing to spend or lose, thereby providing you more control and accountability for the money you are investing.

 

Webull’s financial trading platform offers investors real-time protection against third parties. This is another reason why webull is superior than other systems. Because webull has a counterparty protection feature, it is impossible for anyone but the authorized user to modify, change or close your accounts. Webull offers true asset protection. This is far better than any other system that doesn’t offer this level of protection. Webull can also inform investors that they are not legally required to pay taxes on gains from investments in the U.S. as webull contracts or investment deals are not considered income.

 

Many traders use webull as their main trading platform, but there are many others who also use it for back-testing, fundamental tests, and even for their margin calls and transactions. Webull can also be used by investors for their custom trading needs. For instance, some brokers provide webull trading as a free service to their clients. Some webull brokers may charge a small fee for this service. Webull is a great product for investors large and small because of all the benefits it offers.

 

Webull is a great platform for both new and experienced traders. It offers a low-cost, hands free, transparent way to trade on an equity market. The investor can decide how much he/she trades because there are no fees or commissions to pay. Webull is hard to beat.

 

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