Option Trading Requirements
Q: Does anybody know which are the requirements one should meet to be approved for option trading by his broker? My broker, E-Trade, does not want to switch me to option trading level 2 which is being able to buy and sell existing options. I am very hungry for this and, most of all, can not understand the reason for such a stupid position. It seems to me a sort of crime that someone has to decide how much you can risk on your own. I thought this happened only in socialist country but it seems this fever has landed also in the US. Moreover does anyone know if this is a US law or a particular habit of E-Trade?
A:
I called E-trade yesterday for some clarifications before I decide
to open an account with them. I DID ask them about options and they
didn't even mention this level 2 etc... They just said that options
will be treated like any other securities (except that the commission rates
are different). I put off opening an account with them anyway.
So I guess what I am saying is: I don't understand your
question about what level 2 might mean,
but am concerned that there might be some 'fine print'
that E-trade customer agent did not specify to me. Is that the case?
Can anyone clarify.
Actually, it could only happen in the US where you can sue your
discount broker for allowing you to trade and lose your money.
Aside from that, brokerages look for a few years of trading stocks, or
better, commodities, and income/networth at least $25k for buying
options, $50k+ for uncovered positions.
Without knowing all the facts, option trading can be risky. Approval for higher levels is often
based on many factors such as: Income, financial stability etc. The firm may be acting in a
prudent fashion , to avoid any potential arbitration case. I would suggest that you perhaps
call some other firms and discuss with them your situation or even move your account. If you
want some additional information please refer to the following http://www.mkts.com/option.htm.
As a registered option principal, I often take a cautious approach.