Options trading levels schwab

OPTION APPROVAL LEVELS. The Option approval level dictates what types of strategies you can employ in your Schwab account. In order to see the trading level your account is approved for look in the header of the Account Details window. Option Trading Approval Levels. Allows you to place: All of Level 0 plus: Cash Secured Equity Puts (CSEP) All of Level 1 Plus: Diagonal Call Spreads. Diagonal Put Spreads. Ratio Spreads (long side heavy) All of Level 2 Plus: Uncovered Ratio Spreads. If you decide that you would like to apply to upgrade your option trading level, please complete a new Option Trading Application Option Trading Application. Schwab will evaluate your application and send a confirmation of the option trading method approved for your account. Options carry a high level of risk and are not suitable for all investors. Certain requirements must be met to trade options through Schwab.

Multiple leg options strategies will involve multiple commissions. Please read the Options Disclosure Document titled "Characteristics and Risks of Standardized Options" before considering any option transaction. Call your local Schwab office or write Charles Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA 94104 for a current copy. Copyright ©Charles Schwab, & Co., Inc. 2008. All rights reserved. Member SIPC. (0007-7048) Option Approval Levels Explained. A breakdown of option approval levels one through four. Option level approval is a commonly overlooked area of option trading.

When a person opens an account, the broker assigns them one of several option approval levels supposedly based on the option trader&rsquos knowledge and needs. In many instances, the students in the Options Trader courses I have recently taught did not know what level of approval they had, and a few students were unaware that the levels even existed. I suggest that anyone who is uncertain of their option approval level contact his or her broker to find out which level of option approval their account has. It is possible to fill out additional paperwork and to have the level of approval bumped up. However, it does to take time to do it. Faxing the paperwork might expedite the process a bit. Usually there are four option approval levels, generally ranked from one to four, the highest rank being the highest level of approval. The higher levels allow the trading of the strategies listed in the lower levels. For instance, Level 3 allows not only for spread trading, but also for going long on calls and puts which were included in Level 2. Thus, each level is cumulative. At any rate, there is no official standard of what strategies could be traded at which level. The table below presents universal industry guidelines in terms of strategies commonly associated with each level. I have also added another column for abbreviation.

I usually mark a long position with a plus in parentheses, while for a short position I use a minus sign. Calls are marked by &ldquoc&rdquo and puts by &ldquop&rdquo. At the first option approval level, an option trader is permitted to do covered calls, as well as &ldquolong protective puts.&rdquo Now there is a catch to it at this level a trader is not allow to buy any calls, but is allowed to buy puts only in the amounts he or she holds, and also only on the specific stock that he or she owns. For instance, if a trader owns 100 shares of a stock, then they could purchase a single put contract and nothing more. By the way, this is generally the only level that most brokerages will approve for IRAs (individual retirement accounts). Option approval level 2 is an incremental improvement over the previous level. At this level, a trader is permitted to perform both strategies listed in Level 1, as well as going long on calls and puts. At this level, one is allowed to perform the outright purchase of a call or put on either optionable stocks, exchange-traded funds (ETFs) or even indices. This level of approval is associated with the word speculation, at least from the broker&rsquos viewpoint. Option approval level 3 involves spreads regardless of whether they are diagonal, horizontal or vertical.

However, the same cannot be said for being long or short on a spread. If one is shorting a horizontal spread without sufficient funds in his or her account, the broker would automatically reject that order. Once again, there is limitation on each of these different levels of option approval. Shorting something without ownership belongs to the next level. Option approval level 4 is known as uncovered selling or naked shorting. (I like to use the word &ldquoexposed&rdquo instead of &ldquonaked,&rdquo especially when I am talking about spread trading, which involves multiple positions, also known as legs. Occasionally, one of the positions could become uncovered or exposed, so if I say I have a &ldquonaked leg,&rdquo it does sound odd.) Level 4 is the highest approval level and just about any option method could be performed at this level as long as the size of account is to the broker&rsquos liking, which is usually quite large. At this level, short selling is possible, as well as many different types of ratio spreads. Article printed from InvestorPlace Media, investorplace. com200903option-approval-levels-explained. ©2017 InvestorPlace Media, LLC. More from InvestorPlace.

More On InvestorPlace: Financial Market Data powered by FinancialContent Services, Inc. All rights reserved. Nasdaq quotes delayed at least 15 minutes, all others at least 20 minutes. Copyright © 2017 InvestorPlace Media, LLC. All rights reserved. 9201 Corporate Blvd, Rockville, MD 20850. Power Up with Multiple Option Strategies. Trading Options Online. Scottrade provides option trading tools and comprehensive online education to support your experience level and trading goals. You can trade options from any of our platforms. Option Tools & Technology. Research your tactics with the Option Ideas tool from Recognia. Access a fully customizable option chain that offers multiple expirations in the window.

Compute potential profit and loss by analyzing scenarios to explore how prices are affected by market forces. Take Action. Enhance your ability to react to changing market conditions with a variety of option strategies available at Scottrade. The following option strategies are available on all Scottrade ® trading platforms: Income strategies: sell cash-secured puts and covered calls Growth strategies: buy puts and calls Speculative strategies: sell uncovered puts. Option Trading Support. Insight When You Need It. In addition to the support we provide for all traders, we offer specific option-related help. Options can be used for a variety of purposes. Check out a comprehensive overview. ScottradeЂ™s Active Trader Group can provide one-on-one support to active traders. Talk to your Investment Consultant for more information. A new dialog has opened, containing related content followed by a close link. Clicking the close link will return you to the main page content. By clicking this link, you understand you will be redirected to the Option Industry Council, a third-party website operated and maintained by the Option Industry Council. Scottrade and the Option Industry Council are not affiliated.

The Option Industry CouncilЂ™s website contains information that may be of interest or use to the reader. Third-party websites, research and tools are from sources deemed reliable however, Scottrade does not guarantee accuracy, completeness or timeliness of the information, is not responsible for statements, offers or products issued and makes no assurances with respect to the results to be obtained from their use. No information presented constitutes a recommendation by Scottrade or its affiliates to purchase any product or instrument discussed therein or engage in any specific method. Please research any product or service carefully before purchase. A protective put method raises the breakeven on the underlying by the amount paid for by the put. If the underlying stays above the strike price you can lose the entire premium upon expiration. Call Us At 800.619.7283 Email Customer Support Log In and Trade Local Branches. Online Brokerage quick links. Online Trading quick links. Investment Products quick links. Contact Us quick links. Follow Us quick links.

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Online market and limit stock trades are just $6.95 for stocks priced $1 and above. Additional charges may apply for stocks priced under $1, mutual fund and option transactions. Detailed information on our fees can be found in the Explanation of Fees (PDF). Scottrade does not charge setup, inactivity or annual maintenance fees. Applicable transaction fees still apply. Scottrade does not provide tax advice. The material provided is for informational purposes only. Please consult your tax or legal advisor for questions concerning your personal tax or financial situation. Investors should consider the investment objectives, charges, expense, and unique risk profile of an exchange-traded fund (ETF) before investing. A prospectus contains this and other information about the fund and may be obtained online or by contacting Scottrade. The prospectus should be read carefully before investing.

Leveraged and inverse ETFs may not be suitable for all investors and may increase exposure to volatility through the use of leverage, short sales of securities, derivatives and other complex investment strategies. These fundsЂ™ performance will likely be significantly different than their benchmark over periods of more than one day, and their performance over time may in fact trend opposite of their benchmark. Investors should monitor these holdings, consistent with their strategies, as frequently as daily. Investors should consider the investment objectives, risks, charges and expenses of a mutual fund before investing. A prospectus contains this and other information about the fund and may be obtained online or by contacting Scottrade. The prospectus should be read carefully before investing. No-transaction-fee (NTF) funds are subject to the terms and conditions of the NTF funds program. Scottrade is compensated by the funds participating in the NTF program through recordkeeping, shareholder or SEC 12b-1 fees. Margin trading involves interest charges and risks, including the potential to lose more than deposited or the need to deposit additional collateral in a falling market. The Margin Disclosure Statement and Agreement (PDF) is available for download, or it is available at one of our branch offices. It contains information on our lending policies, interest charges, and the risks associated with margin accounts.

Market volatility, volume and system availability may impact account access and trade execution. Hyperlinks to third-party websites contain information that may be of interest or use to the reader. Third-party websites, research and tools are from sources deemed reliable. Scottrade does not guarantee accuracy or completeness of the information and makes no assurances with respect to results to be obtained from their use. Option Approval Levels. The Option approval level dictates what types of strategies you can employ in your Schwab account. In order to see the trading level your account is approved for look in the header of the Account Details window. Allows you to place: Covered Calls Covered Puts Buy-Writes Unwinds Covered Rollouts. All of Level 0 plus: Long Calls Long Puts Long Straddles Long Combinations Long Strangles Cash Secured Equity Puts (CSEP) All of Level 1 Plus: Spreads Diagonal Call Spreads Diagonal Put Spreads Ratio Spreads (long side heavy) All of Level 2 Plus: Uncovered Calls Uncovered Puts Uncovered Roll-outs Short Straddles Short Combinations Short Strangles Uncovered Ratio Spreads. If you decide that you would like to apply to upgrade your option trading level, please complete a new Option Trading Application. Schwab will evaluate your application and send a confirmation of the option trading method approved for your account. Options carry a high level of risk and are not suitable for all investors. Certain requirements must be met to trade options through Schwab.

Multiple leg options strategies will involve multiple commissions. Please read the options disclosure document titled "Characteristics and Risks of Standardized Options." Member SIPC. Copyright ©Charles Schwab & Co., Inc. 2011. All rights reserved. Member SIPC. (0711-4449) OAP 048: Options Approval Levels Tips – How to Quickly Work Your Way Up The 4 Different Levels. Options approval levels are options trading restrictions placed on your brokerage account to prevent or allow you from entering different options strategies. Most new traders, and admittedly some experienced traders, often don’t know which trading level they are in or even that levels exist. Still, you should always reach out to your current broker and check with them directly to be sure. While trading approval levels and names can vary from broker to broker, there are usually 4 main levels that you’ll encounter. In today’s episode, I’ll first help you understand why brokers have these levels and the types of options strategies you’re allowed to trade in each of the four.

Plus, I'll help answer some common questions I get from members about either applying for a trading level to start with or moving to a higher approval level. Towards the end I'll share some tips and suggestions after talking with 6 different options trading brokers about new strategies or tactics you can use if you’ve been denied after applying for a higher trading approval level. After listening to the podcast today, if you find success using what you’ve learned please post a comment below the show notes. Tried a completely different approach that got you higher trading approval? Add that as well and share it with the rest of the community. Key Points from Today's Show Options Approval Levels: Brokers are required to put in place the trading rules and levels as part of the FINRA rules, specifically Rule 2090: Know Your Customer Rule (KYC Rule) - exchangers and regulators want brokers to know their clients. The first level is covered calls, the natural transition between being a stock investor and being an option trader. Covered call enhances your portfolio, and doesn't cost any additional margin and actually reduces risk. Level two allows you to buy calls and puts, single leg options, and in most cases doing covered put writing - a cash secured covered put. Level three gives you the ability to start trading more complex strategies including spreads such as credit spreads, iron condors, iron butterflies, and calendars in some cases. The fourth level allows you the ability to trade anything that is uncovered, naked, or undefined including single leg calls, single leg puts, short strangles, short straddles, or any combination thereof.

Higher trading level approval requires trading knowledge and the income to support it. Informing your broker of your trading experience and having a secure financial position will make them confident enough to give you a higher trading approval level. Brokers are mostly interested in covering themselves, so if you send them a signed letter that explains your trading credentials and states that you are aware of the trading risks, this releases them of any liability that they may have had. If you still get denied a higher level approval because of a lack of experience, bite the bullet and start trading within your level at a very small scale to show your broker evidence of your trading activity and build experience. FREE Download Podcast Show Notes & Transcript PDF: No time to read the show notes right now? We've made it incredibly easy for you to save time by giving you instant access to the complete digital version of today's show. Click Here to Download Your FREE Copy ? Free Options Trading Courses: Options Basics 20 Videos : Whether you're a completely new trader or an experienced trader, you'll still need to master the basics. The goal of this section is to help lay the groundwork for your education with some simple, yet important lessons surrounding options. Finding & Placing Trades 26 Videos : Successful options trading is 100% dependent on your ability to find and enter trades that give you an "edge" in the market. This module helps teach you how to properly scan for and select the best strategies to execute smarter option trades each day. Pricing & Volatility 12 Videos : This module includes lessons on mastering implied volatility and premium pricing for specific strategies. We'll also look at IV relativeness and percentiles which help you determine the best method to use for each and every possible market setup. Neutral Options Strategies 7 Videos : The beauty of options is that you can trade the market within a neutral range either up or down. You'll learn to love sideways and range bound markets because of the opportunity to build non-directional strategies that profit if the stock goes up, down or nowhere at all.

Bullish Options Strategies 12 Videos : Naturally everyone wants to make money when the market is heading higher. In this module, we'll show you how to create specific strategies that profit from up trending markets including low IV strategies like calendars, diagonals, covered calls and direction debit spreads. Options Expiration & Assignment 11 Videos : Our goal is to make sure you understand the logistics of how each process works and the parties involved. If you don’t feel confident in the expiration processes or have questions that you just can't seem to get answered, then this section will help you. Portfolio Management 16 Videos : When I say "portfolio management" some people automatically assume you need a Masters from MIT to understand the concept and strategies - that is NOT the case. And in this module, you'll see why managing your risk trading options is actually quite simple. Trade AdjustmentsHedges 15 Videos : I n this popular module, we'll give you concrete examples of how you can hedge different options strategies to both reduce potential losses and give yourself an opportunity to profit if things turn around. Plus, we'll help you create an alert system to save time and make it more automatic. Professional Trading 14 Videos : Honestly, this module isn't just for professional traders it's for anyone who wants to eventually have options replace some (or all) of their monthly income. Because the reality is that mindset is everything if you truly want to earn a living trading options. PDF Guides & Checklists: The Ultimate Options method Guide 40 Pages : Our most popular PDF workbook with detailed options method pages categorized by market direction.

Read the whole guide in less than 15 mins and have it forever to reference. Earnings Trading Guide 33 Pages : The ultimate guide to earnings trades including the top things to look for when playing these one-day volatility events, expected move calculations, best strategies to use, adjustments, etc. Implied Volatility (IV) Percentile Rank 3 Pages : A cool, simple visual tool to help you understand how we should be trading based on the current IV rank of any particular stock and the best strategies for each blocked section of IV. Guide to Trade Size & Allocation 8 Pages : Helping you figure out exactly how to calculate new position size as well as how much you should be allocating to your each position based on your overall portfolio balance. When to ExitManage Trades 7 Pages : Broken down by option method we'll give you concrete guidelines on the best exit points and prices for each trade type in order to maximize your win rate and profits long-term. 7-Step Trade Entry Checklist 10 Pages : Our top 7 things you should be double-checking before you enter your next trading. This quick checklist will help keep you out of harms way by making sure you make smarter entries. Real-Money, LIVE Trading: IWM Iron Butterfly (Closing Trade) : Exiting this IWM iron butterfly options trade gave us a $1,100+ profit after pinning the stock price one day before expiration at the peak of our spread. CMG Iron Condor (Opening Trade) : I just recorded my live trading platform (and real money account) as I walked through the process of entering a new iron condor trade in CMG stock. Inside you'll see me analyze, price and fill the trade in real-time. APC Strangle (Closing Trade) : Took about $150 out of this small APC strangle trade even after the stock moved completely against our call short strikes this month.

But as always, implied volatility always trumps direction and because IV went down, the value of this spread dropped more-so than the impact of the directional move higher. IYR Call Credit Spread (Adjusting Trade) : This adjustment is good for 2 reasons. First, it reduces the overall risk in the trade if IYR continues to move higher. Second, it still leaves room for the stock to fall back down into our new profit window. XHB Straddle (Closing Trade) : We were able to bank a $120 profit early in the March expiration cycle for our XHB straddle with the stock trading right in the middle of our expected range. AAPL Call Calendar (Opening Trade) : Look behind the scenes as I use our new watchlist software to quickly filter and find this AAPL call calendar spread trade during overall low implied volatility in the market. COF Strangle (Adjusting Trade) : Here I recorded my live trading screen (and real money account) showing you the entire thought process we used to make an adjustment to my current short strangle in COF to reduce risk. GDX Strangle (Opening Trade) : With gold's high IV we are getting into a new strangle with a 70% chance of success and a decent credit for selling option premium. IBB Iron Condor (Closing Trade) : Today we're exiting an iron condor we traded in IBB for a $142 profit. Inside you'll see me analyze the exit price and fill the trade in real-time.

Thank You for Listening! I'm humbled that you took the time out of your day to listen to our show and I never take that for granted . If you have any tips, suggestions or comments about this episode or topics you'd like to hear me cover, just add your thoughts below in the comment section. Want automatic updates when new shows go live? Subscribe to the Podcast on iTunes, SoundCloud or Stitcher right now before you forget - it's fast and easy. Did You Enjoy the Show? Please kindly consider taking just 60-seconds to leave an honest Review on iTunes for The Option Alpha Podcast. Ratings and reviews are extremely helpful and greatly appreciated. They do matter in the rankings of the show and I read each and every one of them! Also, if you think someone else in your social circle could benefit from the topic covered today, please share the show using the social media buttons you see. This really helps spread the word about what we are trying to accomplish here at Option Alpha and personal referrals like this always have the greatest impact.

Kirk Du Plessis. Kirk founded Option Alpha in early 2007 and currently serves as the Head Trader. Formerly an Investment Banker in the Mergers and Acquisitions Group for Deutsche Bank in New York and REIT Analyst for BB&T Capital Markets in Washington D. C., he’s a Full-time Options Trader and Real Estate Investor. He’s been interviewed on dozens of investing websitespodcasts and he’s been seen in Barron’s Magazine, SmartMoney, and various other financial publications. Kirk currently lives in Pennsylvania (USA) with his beautiful wife and two daughters. Options Trading Tab. Options carry a high level of risk and are not suitable for all investors. Certain requirements must be met to trade options through Schwab. Multiple leg options strategies will involve multiple commissions. Please read the Options Disclosure Document titled "Characteristics and Risks of Standardized Options" before considering any option transaction. Call your local Schwab office or write Charles Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA 94104 for a current copy.

Member SIPC. View the calls and puts being traded for a stock and place trades on individual contracts in the Options tab of the Trading Window. Enter the underlying symbol, select the option you wish to trade, select the variables for the order such as Quantity, LimitStop prices, and more. Then click the button for the action you wish to take (Buy to Open, Sell to Close, etc.) to send the order. The Options Trading tab includes real-time, streaming options data and, for clients approved for options trading, automatic electronic access to all primary listed options exchanges. You may also trade index options such as $OEX. Use the Adv. Options tab to if you wish to place multi-leg option trades. Stock symbols and price and volume data shown here and in the software are for illustrative purposes only. Charles Schwab & Co., its parent or affiliates, andor its employees andor directors may have positions in securities referenced herein, and may, as principal or agent, buy from or sell to clients. The following table describes some of the features of the Options tab: Enter a stock symbol in the symbol field and press Enter . The option chain will be loaded into the Option tab.

If you know an option symbol, but don't know the symbol for the underlying stock, you can you enter the option symbol preceded by a period (".") or followed by ".o" into the symbol field. The underlying stock symbol will load into the symbol field (whether you are on the Stocks or Options tab within the Trading window). Click the check boxes to specify whether you want to view calls, puts or both. Click the down arrow next to the callput display buttons to select a month in which the options will expire. Allow you to determine what type of trade you want to place, or click Cancel to cancel the most recent order on the selected option symbol. The red and green boxes you may see around the bid and ask prices indicate changing quotes, and the color indicates the direction of the change. To see the details and cash requirements of option positions you have entered, go to the Account Detail window and click on the Positions tab. See the Positions Tab topic to find out which types of option strategies are available at each approval level. Note that approval for one level includes approval for all lower levels. For instance, if you have Level 3 approval, you may also enter Long, Covered, and Protective positions. For more information about equity options and advanced option trading strategies, visit Schwab.

com and click on My Benefits located in the At a Glance tab. Copyright ©Charles Schwab, & Co., Inc. 2008. All rights reserved. Member SIPC. (0007-7048) optionsXpress Review. By focusing on options and futures traders who want access to powerful trading tools, optionsXpress has carved out a niche as a popular specialized broker. As a Charles Schwab subsidiary that operates as a stand-alone entity, optionsXpress offers access to investment products that Charles Schwab does not offer, which continues to make them a relevant force in the industry. Latest Update November 11, 2015. Industry-leading options tools.

OptionsXpress provides some of the best options trading tools in the industry, designed to help you identify and analyze opportunities, execute trades, and monitor your options portfolio. Xtend, the company’s primary trading platform, provides continually updated market information and easy access to a variety of powerful research and analysis tools. The Dragon, an investment search tool, helps you track down the options that best fit your investment criteria. To automate your search, you can use The Screener to continually canvas the market for new trading opportunities. If you’re still working out your investment method, fire up StrategyScan, a tool that helps you identify an investment method that fits your goals, trading experience, and risk level. Whether you’re a beginner in options trading or a seasoned veteran, optionsXpress offers a number of proprietary tools to help you take full advantage of market opportunities. Superior mobile trading app. The OX Mobile app puts key features of the optionsXpress trading platform in the palm of your hand. Available for all major smartphone platforms, this app allows you to monitor live market data, check your watch lists, execute trades, and manage your account wherever you go. You can even access powerful charting tools and track down investment opportunities with The Dragon search tool. Though the OX Mobile app does not provide a virtual trading function like the apps offered by some other brokers, it still ranks near the top of the industry, garnering very strong reviews from its users. No minimum to open an account. One big plus for prospective clients is that optionsXpress doesn’t require you to make an initial deposit to open an account.

This means you can get right into the company’s trading platform to do some hands-on testing and take a look through the research materials without any financial commitment. Whether you’re new to trading or just new to optionsXpress, the ability to open an account with no investment is a nice feature to have that not even their parent company, Charles Schwab, can claim. $25,000 virtual trading account. In another offering to new traders, optionsXpress will provide you with a fake money account that allows you to carry out trades with $25,000 in virtual cash. With full access to all of the company’s trading and analysis tools, research materials, and educational resources, you can really put optionsXpress to the test. This is especially important for new traders, since you are able to build up your expertise and test out your investment strategies without putting any of your money on the line. Access to quality educational materials. Strong educational materials are key to learning how to use a new trading platform effectively and to mastering general trading skills and advanced trading strategies. The good news is that optionsXpress has a clear commitment to educating clients by offering resources for traders at all skill levels. The company’s online Education Center places an extensive collection of articles, on-demand video tutorials, and webinar courses right at your fingertips. Beginners will really appreciate the video tutorials designed to walk you through the ins and outs of the optionsXpress trading platform, which will help you get started trading in no time at all.

No base fee for trading options. Unlike some of their competitors, optionsXpress doesn’t charge any base fees on options trades. Other leading brokers assess a base fee of up to $9.99 on every options trade, in addition to $0.75 for each options contract per trade. Though optionsXpress only assesses fees on the number of contracts included in a trade, you do have to pay a minimum fee for each options trade you make. Free Investor's Business Daily subscription with account. A cool added bonus for new optionsXpress clients is a free 13-month subscription to the electronic edition of the Investor’s Business Daily newspaper, which is a trusted resource for timely investment news and analysis. Alongside the optionsXpress daily newsletters full of market news and analysis, your Investor’s Business Daily subscription will help ensure that you stay on top of important events that may affect your investment positions. High options contract fee with a required minimum. If you plan to trade options at a high volume, optionsXpress is not the ideal broker for you. The company has two fee tiers depending on the number of options trades you execute in a quarter. If you make fewer than 35 options trades per quarter, you pay $1.50 per contract with a $14.95 minimum per trade. If you make more than 35 options trades per quarter, you qualify for the Active Trader rate and pay $1.25 per contract with a $12.95 minimum charge per trade. Both tiers can be quite expensive for high-volume traders due to the high price per contract.

For example, OptionsHouse, a main competitor, charges a base fee of $8.95 for a trade plus only $0.15 for each contract involved in the trade. For traders who want to trade a large volume of options contracts, the difference in fees can be substantial. 24-hour support only available for futures traders. Though optionsXpress offers full daytime telephone and online chat support services during the week, only futures traders can access this support 24 hours per day. This makes sense, as many futures exchanges operate around the clock, while U. S. stock and options markets operate only during daytime hours. That said, it would certainly be nice if optionsXpress extended the convenience of 24-hour support to all of its traders. Lacking some financial resources. OptionsXpress isn’t your best option if you’re looking for a broker that offers comprehensive financial resources, like banking and credit or debit cards. To be fair, optionsXpress is a trading specialist and doesn’t present itself as a full-service broker. In fact, the company advises clients who need comprehensive financial services to access them through their parent company, Charles Schwab. While this is certainly an option for you, it requires opening a new account with Charles Schwab, which may be more trouble than you’re looking for. Trading Costs and Fees. Broker Assisted Trades: $0 Futures Contract Fee: $3.50 Maintenance Fees: $0 Margin Rates: 6-8.25% Minimum Account Balance Fee: $0 Mutual Funds Fee - Load: $9.95 Mutual Funds Fee - No-Load: $9.95 Options Contract Price: $1.25 - $1.50 Options Flat Fee: $12.90 - $14.94 Stock Flat Fee: $8.95. ACHEFT Withdrawal: $20 Bounced Check: $20 Check Withdrawal: $20 Domestic Wire Withdrawal: $15 Forced Margin Sellout: $0 Full Account Transfer: $60 IRA Annual Fee: $0 Partial Account Transfer: $0 Stop Payment on Check: $15 Telephone Orders: $0. We find the best of everything. How?

We start with the world. We narrow down our list with expert insight and cut anything that doesn't meet our standards. We hand-test the finalists. Then, we name our top picks. Trading Options. Placing Options Orders. Options Order Types, Limitations, and Conditions. What are the different levels of option trading available at Fidelity? Below are the five levels of option trading, defined by the types of option trades you can place if you have an Option Agreement approved and on file with Fidelity. The option trades allowed for each of the five option trading levels: Covered call writing of equity options. Level 1, plus purchases of calls and puts (equity, index, currency and interest rate index), writing of cash covered puts, and purchases of straddles or combinations (equity, index, currency and interest rate index).

Note that customers who are approved to trade option spreads in retirement accounts are considered approved for level 2. Levels 1 and 2, plus spreads, covered put writing (selling puts against stock that is held short) and reverse conversions of equity options. Levels 1, 2, and 3, plus uncovered (naked) writing of equity options, uncovered writing of straddles or combinations on equities, and convertible hedging. Levels 1, 2, 3, and 4, plus uncovered writing of index options, uncovered writing of straddles or combinations on indexes, covered index options, and collars and conversions of index options. * Retirement accounts can be approved to trade spreads. A new option application and a Spreads Agreement must be submitted at the same time and approved prior to placing any spread transaction. Why would I buy options instead of buying the underlying security? You might buy an option instead of the underlying security in order to obtain leverage, since you can control a larger amount of shares of the underlying security with a smaller investment. This gives you the potential for a higher-percentage return than if you were to buy the stock outright. However, with possibility also comes higher risk. If you buy options instead of the underlying security, your options can expire worthless—but if you buy the stock, you still own the shares. Am I obligated to buy or sell an option's underlying security?

The owner of an option contract is not obligated to buy or sell the underlying security. However, the seller of an option, if assigned, is obligated to buy or sell the security at the strike price. What requirements must I meet in order to trade options at Fidelity? You must meet the following requirements to trade options at Fidelity: A brokerage account An option agreement on file with the appropriate option level for the trade you're attempting to place A margin agreement on file (depending on the type of trade) Sufficient buying power in your account to cover the margin requirement for the trade. How do I establish an Options Trading Agreement? Select Update AccountsFeatures under the Accounts & Trade tab, and click Margin and Options under Account Features. Am I authorized to trade options on margin? To trade on margin, you must have a Margin Agreement on file with Fidelity. If you do not have a Margin Agreement, you must use cash. To establish a Margin Agreement on an account, select Update AccountsFeatures under the Accounts & Trade tab, and click Margin and Options under Account Features. What is an option chain? An option chain is the list of all the options available for an underlying security. What is a multi-leg option?

Multi-leg options are two or more option transactions, or "legs," bought andor sold simultaneously in order to achieve a certain investment goal. Typically, multi-leg options are traded according to a particular multi-leg option trading method. Why should I use the multi - leg option trading ticket and not the single leg option trading ticket? When placing a multi-leg option trade, use the multi-leg option trading ticket because: What are call and put options? With a call option, the buyer has the right to buy shares of the underlying security at a specific price for a specified time period. With a put option, the buyer has the right to sell shares of the underlying security at a specified price for a specified period of time. Where can I go to learn more about option trading? You can learn more about trading options through Fidelity’s Learning Center at Research > Learning Center. How do I see my positions from the Trade Options page? To see your positions from the Trade Options page, select the Positions tab in the top right corner of the Trade Options page. This tab displays each position's Symbol, Quantity (QTY), Price, Value, and Type.

There are also tabs to view Orders and Balances. During market hours, the figures displayed are displayed in real-time. The date-time stamp displays the date and time on which these figures were last updated. To refresh these figures, click Refresh. How do I see my balances from the Trade Options page? To see your balances from the Trade Options page, select the Balances tab in the top right corner of the Trade Options page. This tab displays the same fields displayed on the Balances page. To see more balances, click “Show All” During market hours, balances are displayed in real-time. To refresh the balances, click "Refresh". A list of commonly-viewed Balance fields also appears at the top of the page under the account drop down box.

The Balance fields displayed (when applicable) are Total Account Value, Cash Avail to Trade, Committed to Open Orders, Settled Cash, Margin Buying Power (if you have a margin account), Non-Margin Buying Power and Day Trade Buying Power (if you have a Day Trade Account). How do I see my orders from the Trade Options page? To see your orders from the Trade Options pages, select the Orders tab in the top right corner of the Trade Options page. The tab displays information for open, pending, filled, partial, and canceled orders. You may attempt to cancel or attempt to cancel and replace an order from the Orders tab on the Trade Options page. The date-time stamp displays the date and time on which this information was last updated. To refresh order information, click Refresh. PLACING OPTIONS ORDERS. What types of options orders can I place online? Margin orders require a margin agreement. How do I direct an options order to a particular exchange? To direct an options order to a particular exchange, on the Options trade ticket, in the Route drop-down, select Directed.

Then select one of the following exchanges: AMEX. Chicago Board Options Exchange ISE. International Securities Exchange PCX. Nasdaq Options Market. Are there any restrictions when placing a directed trading options order? Specific share trading is not available when placing a directed options order. Also, The Boston Options Exchange (BOX) will not accept day Stop or Stop Limit orders, or Good 'til Canceled orders. What price restrictions can I place on an options order online? You place a price restriction on an option trade order by selecting one of the following order types: What time limitations can I place on an options order online? You place a time limitation on an option trade order by selecting one of the following time-in-force types: You can’t place an on-the-close option order through Fidelity. com. You must call a Fidelity representative at 800-544-6666 to obtain approval and to place the order. What conditions can I place on the execution of an options order online? You place restrictions on an option trade order by selecting one of the following conditions.

How do I enter an option symbol on the Trade Options page? To enter an option symbol on the trade options page, you must first enter an underlying symbol in the Symbol box. Once the underlying symbol is entered, you are able to choose the expiration, strike and callput from the dropdowns on the trade ticket. After I place an option trade, when does it appear on my Order Status screen? After you make an options trade, it (and its status) will appear immediately on your Order Status screen. The status is updated intraday on your Order Status screen. Can I cancel an option order? Can I cancel and replace an option order? You can attempt to cancel an option order from the Order Status screen by selecting the order you wish to cancel and clicking "Attempt to Cancel." Similarly, you can attempt to cancel and replace an order by clicking the order you wish to cancel and replace and clicking "Attempt to Cancel and Replace." You can attempt to replace the leg quantities, limit price, or trade conditions on the trade. How are fees and commissions for options orders assessed? How fees and commissions are assessed depends upon a variety of factors.

Visit Investment Products > Trading on Fidelity. com for a complete commission schedule. What is expiration Friday? The third Friday of each month is expiration Friday. Options with the same month and year as the expiration Friday date stop trading after the market closes. You should exercise caution with regard to options on expiration Friday. In general, if a long option you purchased has value, you should exercise or sell it before the market closes on expiration Friday, or you’ll lose your profits. Similarly, if a short position option you sold has value, you should buy it back before the market closes on expiration Friday. OPTIONS ORDER TYPES, LIMITATIONS, AND CONDITIONS. How are my options paired and what are the requirements? Your positions, whenever possible, will be paired or grouped as strategies, which can reduce margin requirements and provide you a much easier view of your positions, risk, and performance.

Strategies displayed will include those entered into as multi-leg trade orders as well as those paired from positions entered into in separate transactions. Pairings may be different than your originally executed order and may not reflect your actual investment method. When you buy to open an option and it creates a new position in your account, you are considered to be long the options. Requirement: 100% cash upfront. Buy 10 XYZ Jan 20 Calls at $1 Cost = 10 (number of contracts) x 1 (option price) x 100 (option multiplier) = $1,000. The account consists of: Long 10 XYZ Jan 20 Calls. There are two types of spreads: debit and credit. If you are attempting to open spread positions you must maintain a minimum net worth of $10,000 for 10,000 for equity and indexes equity and indexes in your account. This requirement applies to all eligible account types for spread trading. *Retirement accounts can be approved to trade spreads. A new option application and a Spreads Agreement must be submitted at the same time and approved prior to placing any spread transaction. Retirement accounts can be approved to trade spreads. A new option application and a Spreads Agreement must be submitted at the same time and approved prior to placing any spread transaction. If you are approved for spreads trading in your retirement account you must maintain a minimum Cash Spreads Reserve Requirement of $2,000.

This is in addition to any requirement, if applicable, for the spread. Debit Spread Requirements Full payment of the debit is required. Initial spread transactions require an additional cash amount of the minimum cash requirement (also called the cash spread reserve) of $2,000. The minimum cash requirement is a one-time assessment and must be maintained while you hold spreads in your retirement account. In this example, the first spread order placed is: Buy 10 ABC Jan 50 Calls at $3. Sell 10 ABC Jan 55 Calls at $1. To calculate the debit spread requirement : Net debit (2.00) x number of contracts (10) x multiplier (100) = Debit ($2,000) To calculate the cash reserve debit : $2,000 (debit) + $2,000 (minimum cash requirement) = $4,000 (total cash reserve debit) The account consists of: Cash spread reserve (requirement) = $2,000. Long 10 ABC Jan 50 Calls. Short 10 ABC Jan 55 Calls. Credit Spreads Requirements. You must make full payment of the credit spread requirement. Initial spread transactions require you to meet the minimum cash requirement, also called the cash spread reserve, of $2,000.

The minimum equity requirement is a one-time assessment and must be maintained while you hold spreads in your retirement account. Important: Credit spread requirements can be met by the minimum cash reserve up to $2,000. If the spread requirements are greater than $2,000 you must have the available cash to meet the debit or credit spread requirement. Buy 15 XYZ Mar 60 Puts at $1.00. To calculate the spread requirement: Total spread requirement ($6,000) = $7,500 (Difference between the strike prices x number of contracts x multiplier) – $1,500 (cash received) The account consists of: Cash spread reserve (requirement) = $7,500 ($6,000 cash reserve debit plus $1,500 credit received) Spread: Short 10 XYZ Mar 65 Puts Long 10 XYZ Mar 60 Puts. Buy 5 XYZ Mar 60 Calls at $1.50. To calculate the spread requirement: Total spread requirement ($2,000) = $2,500 (Difference between the strike prices x number of contracts x multiplier) - $500 (credit received) The account consists of: Cash spread reserve (requirement) = $2,500 ($2,000 cash reserve debit plus $500 credit received) Spread: Sell 5 XYZ Mar 50 Calls Buy 5 XYZ Mar 55 Calls. Debit Spreads Requirement. Full payment of the debit is required. Buy 10 XYZ 20 Calls at $2. Sell 10 XYZ 25 Calls at $.50. Net Debit = $1.50 or (Long Premium $2 – Short Premium $.50) x 10 (contracts) x 100 (multiplier) = $1,500. The account consists of: Long 10 XYZ Jan 20 Calls. Short 10 XYZ Jan 25 Calls.

Credit Spreads Requirements. Whichever is lower: The greater of the two naked requirements on the short call, as calculated for naked equity calls The greater of the difference in the strike prices or the difference in the premiums. Underlying price $55. Sell 10 XYZ Feb 50 Put at $1.50. Buy 10 XYZ Feb 45 at $.50 Put. Net Credit = ($1.50 (short premium) - $.50 (long premium)) x 10 (contracts) x 100 (multiplier) = $1,000. Difference between Strike prices: 50 (strike price) - 45 (strike price) x 10 (contracts) x 100 (multiplier) = $5,000. The higher of the Naked Requirement: (($55 (underlying stock) x .25) - 5 (out of the money) + 1.50 (premium)) x 100 (multiplier) x 10 (contracts) = $10,250 (50 (strike price) x .15 + $1.50 (premium)) x 100 (multiplier) x 10 (contracts) = $9,000. An option is considered naked when you sell an option without owning the underlying asset or having the cash to cover the exercisable value. If you are attempting to short naked options you must have a margin account and must maintain a minimum balance of $20,000 for equity and $50,000 for indexes in your account. Equity calls : The higher of the following requirements: 25% of the underlying stock value, minus the out-of-the-money amount, plus the premium 15% of the underlying stock value, plus the premium. Equity puts : The higher of the following requirements: 25% of the underlying stock value, minus the out-of-the-money amount, plus the premium Premium plus 15% of the strike price (for both in-the-money and out-of-the-money options) Index calls : The higher of the following requirements: Broad-based: 20% of the underlying value, minus the out-of-the-money amount, plus the premium 15% of the underlying value, plus the premium Narrow-based: 25% of the underlying value, minus the out-of-the-money amount, plus the premium 15% of the strike price, plus the premium. For short straddles or strangles, the requirement is the greater of the two naked option requirements, plus the premium of the other option, in cash or available to borrow. Requirements are subject to change.

What are the requirements for a buy-to-close option order? You must have written (be short) the number of contracts you want to close in cash or margin. The number of contracts you want to buy at the market close cannot exceed the quantity of contracts held short in the account. What are the requirements for a sell-to-close option order? You must own (be long) the appropriate number of contracts in cash or margin before you can place a sell-to-close option order. Can I sell covered calls online? You can sell covered calls online in the same cash or margin accounts which include the underlying security. What are the requirements for selling calls? You must own (be long) the appropriate number of shares of the underlying security in the same account type (cash or margin) as the one from which you are selling the option You cannot have orders open against the shares of the underlying security. You cannot sell puts to open or uncovered (naked) calls. Are there any restrictions on all-or-none good-'til-canceled options orders? All-or-none good-'til-canceled options orders are not allowed on the Chicago Board of Options Exchange (CBOE). What are the guidelines for limit prices for options?

You may place limit orders for the day only for options spreads and straddles. If the option price is equal to or greater than $10, the limit price should be within 30% of the market price. If the option price is less than $10, the limit price should be within a reasonable amount of the order.