Robinhood Simulated Returns

It’s a good visualization tool and helpful for understanding how an option might behave, but you can't call the returns “expected.” Price movement, IV changes, theta, spreads, fills, and all that jazz can make reality look very different. I would use it as a reference, but not predicting where the option will actually trade

Simulations and paper trading are good for learning the technical how-to-do-that aspects of option trading, and for learning the "shapes" involved. They're generally ***not*** accurate in terms of what you'll get WRT fills, where stops will trigger, the effects of gamma during rapid moves, etc. Your paper/simulated wins will usually be much better than what you'll get live.

All options calculators are accurate as long as you use the right IV, but that's not an easy task. You should spend time looking at different IV levels to understand what can happen with your trade, especially if you trade any type of calendars. Learning about skew and term structure is very important to properly analyze these scenarios.

The reason it differs so much from other tools is almost always the volatility assumption, and specifically that the simulation holds IV frozen. Robinhood draws that payoff curve assuming implied vol stays exactly where it is today at every future price. Reality does not cooperate. When the underlying drops, equity IV usually rises, and when it rallies IV usually falls. So the real path lands off the static curve, often meaningfully for anything past a week out. Two calculators can both be correct and still disagree because they are fed different IV, or one shifts the whole surface as price moves and the other holds it flat. If you want the sim to be useful, stop reading the single line and re run it at a few IV levels, say current, current minus 5 vol points, and current plus 5. That range is closer to the truth than any one curve. For calendars or anything with skew exposure it matters even more, because there the term structure moving is the entire trade. The tool is good for learning the shapes. It is not a forecast because it cannot see the vol surface move.

Not at all