You check "Use black and white"
You have three dithering options (dithering is what makes all the dots for "shading"): Floyd-Steinberg (normal), Floyd-Steinberg (reduced-color bleeding) - that one reduces the number of dots and adds more contrast - and Positioned (not as great for converting to red/black.
I usually go for reduced color bleeding. Also, enable dithering of transparency as well.
Then click convert.