E*TRADE for Options: Account Setup, Approval Levels, and Your First Trade

E*TRADE is one of the best-known names in online brokerage, and its Power E*TRADE platform comes with a visual option chain, strategy builders, and plain-English risk tools. The part that confuses new traders is not the platform but the approval ladder: E*TRADE gates every strategy behind one of four options levels, and the strategy you want may need a higher level than you have. This guide covers the account, the levels, funding, your first trade, and the real costs.

Opening an account

E*TRADE's online brokerage account can be opened on its website in about 10 minutes, by phone, or by mail. There is no minimum initial deposit to open a standard brokerage account and no account minimums or maintenance fees — but note the account must be funded within 30 days to remain open. You will choose an account type first: a standard individual or joint brokerage account is the usual starting point, with Traditional, Roth, and other IRAs available too.

The application asks for the standard US brokerage details: your name, address, date of birth, Social Security number, employment information, and financial information such as income and net worth. You can request options trading during this initial application rather than as a separate step later. Have a government-issued ID handy in case identity verification needs a document check.

Getting approved for options

E*TRADE uses four options approval levels, published on its own options page. Each level includes every strategy from the levels below it:

• Level 1 — Covered positions: covered calls (selling calls against stock you hold), buy-writes (buying the stock and selling the call at the same time), and rolling covered calls.
• Level 2 — Long options and cash-secured puts: everything in Level 1, plus long calls and long puts, long straddles and long strangles, married puts (stock plus a protective put), collars, and cash-secured puts (with cash on deposit to buy the stock if assigned).
• Level 3 — Spreads and naked puts: everything in Levels 1 and 2, plus debit spreads and credit spreads, calendar and diagonal spreads (long only), butterflies and condors, iron butterflies and iron condors, and naked puts.
• Level 4 — Naked calls: everything in Levels 1 through 3, plus naked calls.

Two eligibility points matter. First, Levels 3 and 4 require a margin account — a cash-only account tops out at Level 2, so if you want to trade spreads, you will need margin approval too. Second, E*TRADE notes that IRA accounts can be approved for options through a separate IRA-specific application, with limited margin available for IRAs.

How to apply or upgrade

The simplest path is to select options trading during your initial account application. If you already have an account, log in and go to the Forms & Applications page (under Documents). Under "Add Account Features" you will find Options Upgrade for brokerage accounts and a separate Options Upgrade (IRA) for retirement accounts — both can be submitted online or downloaded as PDFs. E*TRADE assesses your level from the experience, knowledge, and financial information you provide, so fill it in completely and accurately. Reviews typically take a few business days, and you will be notified of the outcome. If you are denied, you can usually reapply after updating your information or gaining experience.

Funding your account

E*TRADE offers several ways to get money in:

• Electronic bank transfer: link a checking or savings account during or after signup and transfer online. This is the fastest free option for most people.
• Wire transfer: faster still for large amounts; your sending bank may charge a wire fee, so check with them first.
• Check by mail or mobile deposit: slower — allow several business days for the funds to clear and become available.
• Account transfer from another broker: you can move an existing brokerage account to E*TRADE electronically (ACATS) rather than selling everything and re-depositing cash; these transfers take longer than cash deposits.

E*TRADE does not charge a fee for standard electronic deposits. Whatever method you choose, confirm the funds show as available for trading before you place orders — newly deposited money can have a brief settlement hold. Start your transfer a few days before you plan to trade, since options orders need settled funds behind them.

Placing your first options trade

E*TRADE's trading happens on Power E*TRADE (the web platform), the E*TRADE mobile app, and Power E*TRADE Pro (the downloadable desktop platform). For learning, the Power E*TRADE web platform hits the sweet spot: full option chains and strategy tools without the desktop download.

The basic flow on Power E*TRADE: type the stock or ETF symbol into the quote box, then open the Options tab. You will see the option chain — expiration dates to choose from, strike prices listed with calls and puts side by side, and bid, ask, volume, and open interest for each contract. Clicking a bid or ask price opens the order ticket with that contract pre-filled: click the ask to buy, the bid to sell.

On the ticket, choose a limit order and set your price between the bid and ask — market orders on options can fill at surprisingly bad prices when spreads are wide, so limit orders are the beginner's default. Set the quantity (each contract covers 100 shares), pick the order duration, and use the preview screen to review the estimated total including contract fees before you place the trade. Power E*TRADE also has a strategy builder for multi-leg trades like spreads. Platform layouts evolve, so if something is not where this guide describes it, check E*TRADE's current help pages.

What it costs

E*TRADE's published pricing for options, from its own options and pricing pages:

• $0 base commission plus $0.65 per contract for equity and index options, if you place fewer than 30 stock, ETF, and options trades per quarter.
• $0 base commission plus $0.50 per contract if you place 30 or more trades per quarter — the discount applies automatically based on your activity.
• Options on futures: $1.50 per contract.
• Exercise and assignment: $0.
• Dime Buyback Program: if you buy to close a short equity option priced at 10 cents or less, E*TRADE charges no per-contract fee on that closing trade.

An options regulatory fee also applies to options orders (it is small and set by the industry, not by E*TRADE). Note that broker-assisted trades placed by phone carry an extra charge on top of the standard commission, so placing orders yourself online is the cheaper path.

The honest fine print

Options involve risk and are not suitable for all investors. Buying options means the most you can lose is the premium — which can still be 100% of what you paid. Selling options creates obligations: a cash-secured put can require you to buy 100 shares per contract at the strike price, spreads can still lose their maximum defined amount quickly, and naked options at Level 4 can produce losses far larger than the premium received. Assignment on American-style options can occur any trading day, not only at expiration.

This article is educational and is not financial advice, nor a recommendation to open an account or trade options. Commissions, approval requirements, platform features, and funding timeframes change — always verify the current figures on E*TRADE's own pricing and account pages before you act.