Options account trading level
There are different ways to trade options, resulting in various types of options strategies. Each strategy bears different risks and has a range of approval levels. Before you place your order, you'll need to complete an options application, have an options agreement on file, and be approved for the appropriate option level for the strategy you wish to trade.
The options application asks for a snapshot of your current financial situation so be ready to provide your:. We'll let you know which option level you're approved to trade—either by email in 1 to 2 days or by U. Mail in 3 to 5 days—based on your delivery preferences.
Or call us after 48 hours at , and we can provide you with your approval information. You'll need sufficient cash or margin buying power in your account before placing an order. Options trading strategies involve varying degrees of risk and complexity. Not all strategies are suitable for all investors. There are five levels of options trading approval, and the approval requirements are greater for each additional level since there's more risk for you and Fidelity.
Your financial situation, trading experience, and investment objectives are taken into consideration for approval. An Options Agreement is part of the Options Application. To trade options on margin, you need a Margin Agreement on file with Fidelity. After you log in to Fidelity, you can review the Margin and Options Log In Required page to see if you have an agreement.
If you do not have a Margin Agreement, you must either add margin or use cash. Typically, multi-leg options are traded according to a particular multi-leg options trading strategy. With a call option, the buyer has the right to buy shares of the underlying security at a specified 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.
Margin trading entails greater risk, including, but not limited to, risk of loss and incurrence of margin interest debt, and is not suitable for all investors. Please assess your financial circumstances and risk tolerance before trading on margin. There are additional costs associated with option strategies that call for multiple purchases and sales of options, such as spreads, straddles, and collars, as compared with a single option trade.
Options trading entails significant risk and is not appropriate for all investors. Certain complex options strategies carry additional risk. Before trading options, please read Characteristics and Risks of Standardized Options. Supporting documentation for any claims, if applicable, will be furnished upon request.
Skip to Main Content. Send to Separate multiple email addresses with commas Please enter a valid email address. Level 1 generally represents the lowest level of risk, while level 5 generally represents the highest level of risk. The types of option trading that occurs at each level and even the number of levels may vary among brokerage firms. You may ask your brokerage firm to provide you with a list and description of each option trading level it has available for its customers.
Make sure you read this publication and carefully consider the information in it before you begin trading options. This bulletin provides a general overview of the steps an investor must take to open an options trading account with his or her broker-dealer. For more specific details on how to open an options trading account, investors should contact their broker-dealer.
For additional information on options and the options marketplace, investors should consider reviewing the following:. Securities and Exchange Commission. Investor Alerts and Bulletins.
Information You Will Need to Provide The information you will need to provide in an options agreement generally includes, among other things: