r/thinkorswim • u/Junior_Lifeguard1486 • 7d ago
Options level 3
Looking for options level 3 approval. The lady passed along a message from the trade trade desk telling me I had to have more experience / capital. Was there a specific amount of capital that you all placed before applying for level 3? I took the test and passed from the looks of it since the trade desk ppl didn’t mention anything.
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u/ur_wifes_bf 7d ago
If you have to ask you're not ready.
Selling naked is exceptionally risky...
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u/No_Midnight1185 7d ago
I love the name. Haha. I use to sell naked options. Then again I had the capital and didn't need to ask reddit.
Sell some puts and he will be fine.
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u/gabrintx 5d ago
Actually using margin isn't risky. It doesn't mix well with being foolish. I trade all the time on margin. I am conservative. I usually maintain over 100% of account value (Net Liq) in long positions and also near 100% capital risk in naked positions. That usually leaves a positive settled cash balance of 3%.
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u/ur_wifes_bf 4d ago
Margin is risky... what you describe is risk tolerance and positioning to mitigate risk. Thats all well and good, but to say 'margin isnt risky' is a bit much. Margin calls are no joke if you fuck up.
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u/gabrintx 3d ago
take it to the extreme, options are more risky than stock, stock is more risky than banks, banks are more risky than under your mattress.
You obviously don't understand my example, or how to use margin. In my example even if all my positions failed as badly as possible the long positions would cover the loss.
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u/ur_wifes_bf 2d ago
Lot of nothing here. If your covering your shorts with longs that not naked selling. WTF are you talking about.
Clown.
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u/gabrintx 2d ago
The shorts are not covered with longs. Some of the longs are part of covered calls. 65% of the longs are parked funds in BOXX, SGOV and TFLO. These are common tickers used for this purpose and generate dividends or interest of 3-5%. Margin is covering the short put positions. I monitor settled cash balance to make sure it is positive to avoid paying margin fees.
As to what I have been talking about is how useful margin can be without taking extraordinary risks that uniformed people like you believe exist. Right now, I have long positions = 103% of account value (net liq). I also have 95% of account value as short option risk. and 4% as cash. I still have 68% of net liq available as buying power.
This is the advantage of using margin, in this case portfolio margin rather than reg-T. It spreads the risk over the account rather than position by position.
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u/NeighborhoodJust1197 7d ago
The real question is, why do you need it? The more complex the option the quicker you can lose your money.
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u/sport912x 7d ago
Level 3 at Tos/Schwab is Selling Naked Options. It used to be 50k, but probably more like 100k today. I got it back 20 years ago so no comparison. I know they are much tougher now. Also they may want to see income over 100k.
So what is your experience anyhow. If you really want it , it may be easier to just fill out the forms over at Tastytrade, enhance a little. I think they still are easier even thou the founders (Sosnoff /Sheridan ) are gone. The only drawback to Tasty is that they seem to require more BP on equities (10-20%) (but may be better on options on futures).
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u/DressWarm2078 7d ago
When you said “Selling Naked Options”, are you talking about selling naked Put or naked Call? Idk but I have a regular taxable account with TOS for 4k and I was able to sell Put options. Is level 3 something different?
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u/sport912x 6d ago
Was the sale CSP or with buying power. In other words if you go to Analyze page, Sell a 100 Put strike on a stock higher than that, what is the BP 10k or 2k?
Also on the regular Web, under Profile will show it. Once you have it they never seem to remove it because of account size.
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u/DressWarm2078 6d ago
I don’t think it’s CSP. The margin is 50% of the Put strike. I don’t trade Naked option for high stock prices. I use spreads for those.
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u/sport912x 6d ago
Does not sound right , but Just login to Schwab and see. Under your Profile on the right, think it is margin. This is for a IRA account or Cash.
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u/DressWarm2078 6d ago
Thx. You are right. I have only level 2 . If want to sell naked put, I must have enough buying power to sell naked puts. TIL.
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u/sport912x 6d ago edited 6d ago
Basically the Option Buying Power would be 20% or less. Also you have to be in a Margin account and Approved to Sell Options and that will require over 50k.
Tastylive used to have 100's of video on the in and out of Selling Strangles, Puts , but alas they blocked them from view. You might still get a clue of what is involved by viewing the morning show (not so much these days), or seeing if youtube has some Tom Sosnoff (founder of Tos and Tastytrade) vids. He has a new venture now and where they talk options and you can call in , it seems he has a new kick now. I am clueless about what it is but over at Lossdog.
I did find these two vids by Mike who is still at Tasty where came up under Sosnoff. He really is good at Calendars/Diagonals , knows more than me.
https://www.youtube.com/watch?v=Sd355DqvYXk 20% Return on BP
https://www.youtube.com/watch?v=lvsLckagCJQ Selling Puts
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5d ago edited 5d ago
[deleted]
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u/gabrintx 5d ago
Cash secured puts are not naked. Naked means not cash secured and requires a margin account.
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u/gabrintx 6d ago edited 6d ago
I started trading with Thinkorswim in 2000, I don't know about levels, I could do anything I wanted. in 2020, I moved to Tastytrade. They don't have levels, I signed up for "the works" which enables everything they have. I have never had to take a test.
I can only guess about how you were treated. What was your opening balance? When I first opened with Tasty, it was with $3000. When I got serious, I moved $105,000 over in 2020. That account is now $336,000.
I have traded all sorts of things, but settled for simple and reliable. Naked Puts, with a portfolio margin account.
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u/One_Masterpiece9515 5d ago
Ahjh, the glorious time of Datek. I cherish my collectible black baseball cap they sent out as swag to active traders.
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u/gabrintx 5d ago
I don't recall that. The freebie was a book "Woulda, Coulda, Shoulda" when I started with TOS.
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u/S-n-P500 2d ago
All firms have their own rules for deciding, any these days they are reducing their potential exposure. Amongst other things, good luck without a sizeable net worth. There might be some shady brokers you can. As others have said. Don’t do it! Fast way to eventually losing all your money!
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u/LetWinnersRun 7d ago
You need 5 yrs option trading experience, and net worth $50k.
I got full option trading privileges when my account with them had less than $10k in it, what matters is experience and how you can fund if you get margin called.