Webull Options Trading Levels
If you are looking for a good broker to trade options on, Webull is always a top candidate. The popular broker offers many unique features that are designed to give traders an edge in their craft. Zero commissions on options trades, detailed options chains, and sophisticated data feeds and charting, all come together to create the potential for profitable options strategies.
Let’s go over the details of options trading at Webull to help you decide whether Webull should be your broker of choice.
Approval Levels
The first thing to note about trading options at Webull, is that new traders should apply for the right to trade them. There are a few different levels of options trading permissions that traders can apply for, and each tier comes with additional capabilities and risk profiles.
The application process is straightforward. Investors should answer a series of questions pertaining to their demographics, risk appetite, income, years of experience, and investment goals. Based on the answers given, Webull makes a determination about which level of options trading is most suitable.
The decision generally comes with a day or two, and once a permission for a particular trading level is granted, trading can commence immediately.
One thing to keep in mind is that the decision is not final. Investors can, at any time, apply for either an upgrade or a downgrade in their permissions. This is especially useful for traders who decide that they have either exposed themselves to too much risk or not enough.
There are many factors that go into choosing the ideal options permission level and traders should consider the differences between them carefully.
Here is a breakdown of how Webull classifies each of the available levels.
Webull Level 1 Options
Level 1 is the most basic as would be expected. Traders with this permission can buy long calls and puts. Covered calls and cash-secured puts are also available at Level 1.
Webull Level 2 Options
At Level 2, traders have access to everything in Level 1 with the addition of long straddles and strangles, covered puts, protective puts, and collars are also available.
Webull Level 3 Options
At Level 3, selling options on margin comes into play. Spreads are possible at Level 3, including credit spreads, debit spreads, iron condors, butterflies, iron flies, and more. Many serious options traders request Level 3 or above.
Webull Levels 4 and 5 Options
Levels 4 and 5 are not yet available but traders can get an early approval for these levels. Once Levels 4 and 5 are released, traders who qualify will be able to write naked calls and puts on ETFs (Level 4) and Indexes (Level 5).
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Advanced Options Strategies
As you can see, the types of strategies available to options traders at different levels varies quite considerably. Since most traders will likely opt for Level 3 permissions, there are a couple of important things to note about trading spreads at Webull.
For one thing, spread trading is not yet as intuitive as it is likely to be soon. Traders on the web-based platform who want to trade advanced options strategies (multi-leg strategies combining long and short options) should ‘leg into’ their positions.
Legging into advanced positions is certainly a viable way to benefit from various strategies, but traders should understand how the margin requirements work while doing so. For example, it is best to go long first, then sell (write) against a position. Following some simple ‘order of operation’ techniques, traders can take full advantage of Webull’s options trading.
Using the desktop trading platform or the mobile app, there is much more functionality where spread selection is concerned. Users can choose between a wide range of available strategies before selecting the strikes they are happy with.
Notable Trading Tools for the Active Trader
When it comes to tools for the active trader, Webull has a lot to offer. Here are a few of the most notable tools available to options traders.
PnL graph – The PnL graph populates a visual representation of the expected value of a position in relation to the value change of the underlying, time, and a few other factors. Using the graph, traders can quickly see exactly when and where a particular strategy will be in either profit or loss.
Option Contract Charting – Apart from the excellent charting provided by the Webull platform, there is another interesting feature that many options traders using the desktop platform like to take advantage of. By clicking ‘Percent Change’ in the options chain, the chart in the options trading layout displays the chart for that particular options contract. While this can be viewed manually at any time, the ‘quick view’ that is possible for each of the contracts and spreads available in the chain provides valuable insights. Using this information makes it easier for traders to find better entries and exits for their options contracts. Definitely a valuable feature.
Fees and Commissions
In addition to all of the other reasons traders might want to use Webull for their options trading, there are no trading fees for buying and selling options, and there are no fees for exercise or assignment. This is quite unusual in the options world, with even the most popular brokers charging at least $1 per contract, per side.
For traders who buy and sell a lot of options contracts, these fees usually add up quite quickly. At Webull, however, that is never an issue. Investors trading options at Webull will never be charged for putting on or taking off a trade.
Pros and Cons
There are some notable benefits when it comes to trading options at Webull. There are also some considerations to take into account. Here is a short list of pros and cons to help you decide if Webull is right for you.
Pros
- Excellent charting
- Auto-exercise toggle is very useful
- Multi-leg strategy support
- Multiple ‘risk’ levels to choose from
- Zero commission or exchange fees
Cons
- Some inconsistencies exist between mobile, web, and desktop
- Not all trading levels are available yet
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3 FREE stocks valued $3-$3,000 give-away at Webull.
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