Option Levels 1-4
What are the levels of Option Trading Permissions?
IBKR introduced two new, lower levels of option trading permissions, Level 1 and 2, in order to be able to offer option trading to those who currently would not qualify for Limited or Full option trading permissions. Limited permissions are now referred to as Level 3, and Full permissions are considered Level 4.
Please note that clients of IB Canada and IB India are not eligible for option level permissions and remain with Limited or Full option trading permissions.
The type of option strategies available to trade will depend on the level of option permissions approved on the account. The various levels are as follows:
|
Level |
Option Strategies Allowed |
|
Level 1 |
Covered calls, i.e. short call vs long equal quantity of underlying, are allowed. |
|
Level 2 |
Covered Options Positions as defined by FINRA Rule 2360 are allowed with the additional restriction that the expiration date of the long option must be on or after the expiration date of the short option in a spread. |
|
Level 3 |
Option strategies that have limited maximum potential loss are allowed. |
|
Level 4 |
All option strategies are allowed. |
For examples of the types of option combinations allowed in each level, please see the following chart:
|
Strategy |
Level Requirement |
|
Covered Call/Covered Basket Call |
Level 1 |
|
Buy Write |
Level 1 |
|
Long option positions |
Level 2 |
|
Long Call |
Level 2 |
|
Long Put |
Level 2 |
|
Covered Put |
Level 2 |
|
Protective Call |
Level 2 |
|
Protective Put |
Level 2 |
|
Long Straddle |
Level 2 |
|
Long Strangle |
Level 2 |
|
Conversion |
Level 2 |
|
Long call spread |
Level 2 |
|
Long put spread |
Level 2 |
|
Long Iron Condor |
Level 2 |
|
Long Box Spread |
Level 2 |
|
Collar |
Level 2 |
|
Short Collar |
Level 2 |
|
Short Put |
Level 3 |
|
Synthetic |
Level 3 |
|
Reversal |
Level 3 |
|
Short Call Spread |
Level 3 |
|
Short Put Spread |
Level 3 |
|
Short Iron Condor |
Level 3 |
|
Long Butterfly |
Level 3 |
|
Unbalanced Butterfly |
Level 3 |
|
Short Butterfly |
Level 3 |
|
Calendar Spread - Debit |
Level 3 |
|
Diagnol Spread - Short leg expires first |
Level 3 |
|
Short Naked Call |
Level 4 |
|
Short Straddle |
Level 4 |
|
Short Strangle |
Level 4 |
|
Short Synthetic |
Level 4 |
|
Calendar Spread - Credit |
Level 4 |
|
Diagnol Spread - Long leg expires first |
Level 4 |
What account type is needed to trade options?
Option trading permissions are available for Margin, Cash and IRA/Retirement accounts.
A Margin account may request any level of option trading permissions (1-4). A Cash or IRA account may only request levels 1-3, and full payment is required for all call and put purchases.
Please Note
- Clients who maintain either a cash or margin type account must maintain net liquidating equity of at least USD 2,000 (or equivalent in other currencies) in order to establish or increase an existing uncovered options position.
How do I request or update my option trading permissions?
To update your trading permissions for options:
1. Log in to Client Portal
2. Select the User menu (head and shoulders icon in the top right corner) followed by Settings
3. Under Account Settings find the Trading section
4. Click on Trading Permissions
5. Locate Options section, select Add/Edit or Request under Options, select the level of permissions you want to request and click on CONTINUE.
6. Review and sign the disclosures and agreements.
7. Click CONTINUE and follow the prompts on screen.
Trading permission requests may take 24-48 hours to be reviewed. Find more information on trading permissions in the Client Portal Users' Guide.
Please Note
- When only Options permissions are available for a country the permissions will include both Stock and Index Options.
- US legal residents are generally excluded from trading securities options outside of the United States due to SEC restrictions. Securities options are defined as any option on an individual stock, US legal stock, or any cash settled broad based index future.
- Certain option contracts require an additional permission for "Complex or Leveraged Exchange Traded Products".
Is it possible for someone under the age of 21 to trade options?
All clients are eligible for Level 1 options trading permissions. However, IBKR requires that clients be at least 21 years of age to be eligible for level 2-4 option trading.
What are the requirements to qualify for option trading permissions?
IBKR offers various levels of trading permissions to applicants meeting minimum age, liquid net worth, investment objectives, product knowledge and prior experience qualifications. This information is gathered in the account application phase or in Client Portal if a trading permissions upgrade is requested following initial account approval.
If you need to update or review your financial information, investment objectives or experience use the button above or follow this procedure:
1. Log into Client Portal
2. Go to the User menu (head and shoulders icon in the top right corner) followed by Settings
3. Under Account Settings find the Account Profile section
4. Click on Financial Profile, rectify your information and confirm.