Article Options: The Level One Blues

T2W Bot

Staff member
1,498 115
When you open your first option trading account (or add option capability to an existing equities brokerage account), your broker assigns you an options approval level. Usually the levels run from Level One to Level Five. Your approval level determines which option strategies you are allowed to use in that account.
The idea behind the approval level structure is that the riskier an options strategy is, the more options experience and/or capital should be required. Here is a typical list of approval levels and the types of trades allowed:
Level 1 – Covered Calls, Protective Puts (i.e. option positions that also include a position in the underlying stock)
Level 2 – Level 1 items plus speculative call and put buying (i.e. buying calls alone as a bullish speculation, or buying puts alone as a bearish speculation)
Level 3 – Level 2 items plus debit spreads (i.e. positions involving more than one option, where the maximum loss is the original net debit paid. For example, bull call...

Continue reading...
Last edited by a moderator:
AdBlock Detected

We get it, advertisements are annoying!

But it's thanks to our sponsors that access to Trade2Win remains free for all. By viewing our ads you help us pay our bills, so please support the site and disable your AdBlocker.

I've Disabled AdBlock