Options Levels at Charles Schwab: Takeaways
• Schwab has four options approval levels.
• You can go online to add options trading to an account or request a higher options level.
• To lower the options level on a Schwab account, you need to make a phone call.
Charles Schwab Options Levels
Charles Schwab investors have many products to choose from, and options contracts are one of them. To trade these derivatives, an account must first request this privilege, and the request must be approved.
There are four possible option levels at Schwab. In order from least to most aggressive, they are:
Covered (Level 0)
Long (Level 1)
Spreads (Level 2)
Short Uncovered (Level 3)
Level 0, covered, generally includes covered calls, protective puts, cash-secured puts, and collars. The next tier, long, includes everything in the first tier and adds the ability to buy calls and puts outright. Level 2, spreads, adds all kinds of option spreads to the lineup. These are multi-leg trades like condors and butterflies. The final tier, Level 3, adds more advanced strategies. These include short ratio spreads and short uncovered calls and puts. The last two tiers, Levels 2 and 3, require margin.
Schwab Options Levels Approval
Not every account type qualifies for every option level. For example, IRAs cannot apply for Level 3, short uncovered. Under industry rules, option spreads can only be traded in a margin account. Therefore, Levels 2 and 3 must have margin enabled. Schwab does offer limited margin for IRAs, so they can trade spreads at Level 2.
Some account types are limited to Level 0 trades. These accounts include custodial accounts, Qualified Retirement Accounts (such as 401k plans), charitable accounts, Coverdell Education Savings Accounts, and Personal Choice Retirement Accounts.
Accounts that qualify for Levels 2 and 3 can still use Schwab’s available cash-sweep features for uninvested cash. Depending on the cash feature and account eligibility, idle cash may receive FDIC coverage at program banks or be held in a money fund, while SIPC applies to brokerage assets under its own rules.
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Applying for Schwab Options Trading
Schwab’s website makes it very easy to apply for options approval. Go to the account icon in the upper-right corner (the head-and-shoulders icon) and select Margin & Options from the drop-down window.
On the next page, you’ll see the account’s margin and option levels. If you have multiple accounts with Schwab, use the blue drop-down menu in the top-left to move between accounts. Each account must submit a separate application for options trading.
With the correct account selected, it’s time to choose the desired options level. There is a color-coded menu with the four tiers noted above. If a tier isn’t available for the account selected, it won’t be available.
After you choose the option tier you want, Schwab’s online application will ask for a few pieces of information, such as stock and options trading experience, employment details, and financial profile. The whole application should take less than 10 minutes to complete.
Besides the head-and-shoulders icon, the options application can be accessed straight from an options order ticket if options trading hasn’t yet been enabled on the account. If desired, this paper form can also be used to submit an application for margin or options.
It’s important to note that the above instructions only apply to adding or increasing options levels on an account. To decrease an options level or remove options trading entirely, a phone call to Schwab’s options department is required. The phone number is 888-245-6864. To remove margin from an account, use 877-870-7317.
Learning about Options
Once an account has enabled options trading, it’s time to learn more about them. Schwab’s website has a large collection of educational material on derivatives. To find these helpful resources, simply go back to the application page on its website and scroll down to the bottom. You’ll see a section called Resources. There, you’ll find links to articles on both margin and options. Here are a few examples we found:
- How to trade options
- Covered Calls: Beyond the Basics
- Introduction to options
Trading Options on Schwab
Once options trading has been added to an account and the necessary education has been finished,
trading can begin. Orders can be placed through the mobile app, website, or thinkorswim platforms. The
latter come in three versions: web, desktop, and mobile. Altogether, that gives traders five
platforms for options trading. All five support multi-leg option spreads.
Somewhat surprisingly, some of Schwab’s best option tools are found not on thinkorswim but on its website. There, you’ll find chains, a strategy finder, an options checklist, the educational materials noted above, and more integrated spreads than thinkorswim offers. Plus, the website’s derivative tools are easier to use.
Trading Option Spreads at Charles Schwab
Charles Schwab gives investors access to almost every option spread you can think of. Whether you want to trade simple debit and credit spreads or build complex, multi-leg spreads, you can do that at Charles Schwab.
Schwab Option Spreads Cost
Cost is an important factor when trading spreads. Some brokers charge per-contract fees, while others add the fees on top of commissions. Some place a cap on fees, and others do not. Still others charge nothing, and you only have to pay the regulatory fees, which are fairly small.
At Charles Schwab, there are no commissions, but there are per-contract fees of $0.65. There is no fee cap, so each contract is charged, regardless of how many lots you are trading.
Ease of Use
Schwab is a full-service broker with a huge list of available features, tools, and products. The broker's ease of use depends largely on the type of investing you do.
The website requires less of a learning curve for options spreads, but the pro-level trading platform has many additional features that can help you plan and visualize your trade setups.
In general, the level of difficulty associated with trading spreads at Schwab is on par with that of most other major online brokers.
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Tools and Platforms
Charles Schwab offers several tools to create and manage options spreads. You can set up positions right from the Schwab brokerage website, one of the available mobile apps, or one of the dedicated trading platforms.
Each platform offers different tools and resources, and the most versatile one is thinkorswim.
Permissions
Depending on the types of spreads you want to incorporate into your trading or investment plan, you’ll need to apply for one of Schwab’s four levels of options permissions. Schwab also describes its risk profiles as Limited Risk, Moderate Risk, Increased Risk, and Unlimited Risk. As you increase the level of risk, more spreads become available to you.
Most options traders do well with the Increased Risk level as it allows for the most common spreads, such as butterflies, iron condors, credit spreads, and similar setups. The Unlimited Risk level is generally meant for investors looking to sell naked options (selling options without owning the stock or buying another option to create a spread).
Is Charles Schwab Good for Option Spread Trading?
Charles Schwab can be a solid choice for options spread trading thanks to its low per-contract fees and strong thinkorswim trading platform. The platform offers advanced options analysis tools, including spread strategy evaluation and risk visualization features. Schwab also provides educational resources focused specifically on options spread trading strategies.
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Updated on 3/30/2026.
Chad Morris is a financial writer with more than 20 years experience
as both an English teacher and an avid trader. When he isn’t writing
expert content for Brokerage-Review.com, Chad can usually be found
managing his portfolio or building a new home computer.
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