I can only keep repeating my statement. In a level 3 account, you can NOT use credit. It gets added to your margin requirement, thus neutralizing it's benefit until the option is closed. In a level one account you CAN use the credit to sell an additional option contract and/or to reduced your margin requirement. I suggest you review my earlier examples of when and how you can use the credit. Those examples are 100% correct.
Level one is not approved for naked put or naked call selling. Although, you can sell naked puts that you have the potential margin buying ability to buy them with, if put to you. But definately no naked call selling.
Can you show an example of real market data how you could practically use premium to sell more options when you can't sell naked?
The multiple examples I posted are perfect examples. You can select any stock you want to use as a real market example data. Just plug your stock into my examples for either selling a put or a covered call (buy/write).
Those were hypothetical examples. If you can't sell a naked put, then you can only buywrite. In that case, practically speaking you can never sell enough premium to buy another share of stock unless you have like 10MM and are looking to buy another 100k worth of stock. Secondly, even your own broker (Schwab) doesn't provide a distinction in margin requirements between option level approvals. Their option and margin documents don't say a level 1 guy can do this and a level 3 guy can't. So you are saying that hat a firm that is highly regulated (and highly reputed in the retail space) will bend the Federal Reserve Regulations for you. I get the sense the more likely issue is that you don't know what you are talking about and the options guy on the phone is humoring you to get you off the phone.
I trade 3 account for 3 people who have "level one" approval. In all 3 accounts, if I only have enough cash to sell 4.75 put contracts, but the credit will bring in the remaining cash need to round up to 5 contracts, I then sell 5 contracts. If it's in an IRA account, I simply tell the broker to over ride the computer stopping me. I do the same thing when initiating a buy/write instead of a put. You keep telling me I can't do what I've been doing several times each year, for several years. Given that we are both merely repeating ourselves at this point, I think we are done with the discussion. Again, top trading aproval, of level 3, you can NOT use the credit. Level one trading approval you can.