How to Add Options Trading to Your Account
There's a lot to learn when it comes to trading options, but we have the tools to help give you the confidence to put together a strategy. When you're ready to start, you can add options trading to your accounts.
What are options and why would I want to trade them?
An option is a contract between a buyer and a seller. When you buy an option, you have a contract that gives you the right (not the obligation) to purchase or sell an underlying security, such as a stock, at a set price within a specific time frame. When you sell an option, you are obligated to buy or sell the underlying security if the buyer exercises his or her option. If the option isn't exercised or assigned by the expiration date, the contract expires.
While options can offer diversification in your portfolio, they’re not appropriate for every customer as they can carry substantial risk. Visit our Learning Center to find several courses on options trading. You may want to start with our introduction to options video.
What do I need to know?
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.
Note: If you want to trade option spreads in an approved IRA, you'll also need to complete the Supplemental Options Spread Agreement (PDF).
The options application asks for a snapshot of your current financial situation so be ready to provide your:
- Yearly income
- Options trading experience
- Net worth and liquid net worth
If you prefer, you can download, print, and complete the Options Application (PDF) and, if requesting the ability to trade spreads in an IRA, the Supplemental Options Spread Agreement and send to:
PO Box 770001
Cincinnati, OH 45277-0002
What to expect
We'll let you know which option level you're approved to trade—either by email in 1 to 2 days or by U.S. Mail in 3 to 5 days—based on your delivery preferences. Or call us after 48 hours at 800-343-3548, and we can provide you with your approval information.
Note: You'll need sufficient cash or margin buying power in your account before placing an order.
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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. Margin credit is extended by National Financial Services, Member NYSE, SIPC.
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.