When you open your account with a broker, you should request options trading authorization. Usually to buy options you need the basic level or Level 1 clearance. If you plan on selling naked puts (not calls) you more than likely need Level 2 clearance.
The margin requirements will be much lower and you will be able to buy and sell options at anytime. We are going to cover options trading margin requirements for naked options and option selling.
However, they all must adhere to the minimum required by the Financial Industry Regulatory Authority (FINRA) and the option exchanges where the contract is trade.
Some brokers will classify options trading clearance within different levels ranging from 1-4.
But each of these strategies allows us to collect option premiums up front and put up margin for the trade.
As a result, the stock move and yet the option expires with little or no value at expiration.
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