From the OptionsXpress website (a leader in options trading): Question: "What level of options trading will a customer be approved for?" Answer: "Clients will be authorized to trade options after being reviewed based on experience and financial background, among other criteria. "
I promise you if you have the money and have enough intelligence to know how to answer a multiple choice test you are good to go. I know a fellow trader who was given a couple of chances to "revise" his portfolio margin answers so he would qualify.
This is strictly a liability thing for the brokerage. All they need to do is ask and have you say that you are experienced. They don't need proof or anything. The reason they do this is because of all the lawsuits that have been filed over options. Usually the court will side favorably if the customer of brokerage can show that they didn't understand the risks. With this assertion that you know what you are doing they have better legal ground in a lawsuit.
Qualify for what, exactly? After review, stock and option brokers will usually give you clearance for one of the following trading levels, 6 being the highest level: 1: Trading stocks 2: Covered call writing 3: Buying calls and puts 4: Debit spreads 5: Credit spreads 6: Naked equity call writing
Portfolio margin requires you to take a ridiculous multiple choice test to qualify (with most brokers I believe). You have to pass the test
Unfortunately it's not that easy. You cannot simply sign a document that says you understand the risk of trading options and start selling naked calls (or other similar unlimited-risk positions) by tomorrow morning, not going to happen.
Well good for you, but how many applications were rejected during that same time, care to tell us about it?
i have traded options and funded different accounts over the years with at least 5 different brokers and it really is giving them your money and saying you understand the risks.