Option Levels at E*TRADE
In this article, we’ll cover:
• E*TRADE customers can apply for four option levels.
• Existing customers can request an options-level upgrade using either an online application or a paper form.
• Webull can be used as an alternative to E*TRADE for options trading.
Overview of Option Levels at E*TRADE
E*TRADE has 4 option levels. They are named simply Level 1, Level 2, Level 3, and Level 4.
Level 1 includes covered calls and buy-writes. Level 2 includes all Level 1 strategies plus additional trades, such as long calls, long puts, married puts, covered puts, collars, long straddles/strangles, and cash-secured puts. Level 3 builds on Level 2 by adding spreads and naked puts where permitted. Level 4 includes all lower levels plus naked calls.
Eligibility
Margin approval is required for Level 3 and Level 4, and naked equity call or put trades require at least $2,000 in margin equity. E*TRADE does offer limited margin for IRAs, and IRAs are eligible for Level 3 at E*TRADE. IRA customers seeking Level 3 approval must also complete the required indemnification agreement.
Applying for Options
The easiest way to apply for one of E*TRADE’s option levels is to apply for it with an initial account application, which can be made using the broker’s website or mobile app. A pdf form is not available for an initial application.
Existing account holders can sign into the website and submit a digital application for options privileges or margin. The place to begin is the Forms & Applications page. This forms center is available under the Documents link in the upper-left area of the site.
On the Forms & Applications page, there are many pdf and online forms for different account tasks. Scroll down to the area for adding features to an account. In this section, you’ll see online and pdf forms for adding options trading. IRA accounts have their own forms, so make sure to choose the retirement-account version, either digital or pdf, if you want to add options approval to an IRA.
For obvious reasons, the most convenient method will be to use the online form. If you do want to use a hard-copy form, there are the two forms for taxable and retirement accounts:
Options application for taxable accounts
Options application for retirement accounts
It is not possible to downgrade an options level on an account with the online form. And remember that any application is subject to approval.
Learning How to Trade Options
After receiving options approval, it’s wise to study derivatives before placing real trades. Under the Markets & Ideas tab in the main menu on the website, there is a link for options. In this area, we found information about the available option levels along with details on the tools E*TRADE provides for trading contracts.
Trading Options
E*TRADE offers several useful resources for trading options. These include options chains, the Options Income Backtester, strategy-analysis tools, options-position grouping tools, and more. Many of these resources can be found through the same options hub and platform-demo area mentioned above.
E*TRADE has $0 base commissions on online options trades, although the standard per-contract fee is 65¢. Customers who place 30 or more stock, ETF, and options trades per quarter receive a discounted 50¢ options contract fee.
Webull as a Fallback
If E*TRADE’s per-contract option fee causes you to balk, there is always Webull.
Webull charges no base commission on many option trades, and many stock and ETF options have no standard per-contract fee, so budget traders may want to consider it as a replacement for E*TRADE. However, certain index options and oversized option orders can carry contract fees.
Like E*TRADE, Webull has four option levels that are cumulative, meaning that the trades available in a lower level are also included in higher levels. There are some important differences between E*TRADE’s and Webull’s levels, however. Cash-secured puts, for example, are on Level 1 at Webull but on Level 2 at E*TRADE. Level 4 at Webull includes uncovered calls and puts.
Webull customers get some really useful option tools. For example, a price ladder can be used to place a trade for an individual contract. On the broker’s mobile app and desktop program, there are integrated spreads. Nevertheless, Webull’s software for derivatives tends to lag behind E*TRADE’s.
Webull traders also receive educational resources for options. These materials can be found in the broker’s Learn section. Here, we found articles on diagonal spreads, covered strangles, and short puts.
Webull customers can use the broker’s website, mobile app, or desktop platform to apply for options trading or adjust an account’s options level. On the mobile app, tap the Webull logo in the bottom menu, tap Account Management in the upper-right corner, choose the account, and select Option Trading Level. Then tap Apply for Options Trading and follow the prompts.
On the website, click on the account icon in the upper-right corner. From there, click on My Account. On the My Account page, choose the applicable account, click the blue Manage My Account hyperlink, and use the Trading Privileges section to view or apply for options trading.
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Written by Alex Bost
Updated on 5/11/2026.
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