Options trading is gated by approval levels. Brokers assign you a level when you open an account, and that level determines which strategies you can use. If you want to trade iron condors, you need Level 3. If you're sitting at Level 2, you need to request an upgrade.
The process isn't difficult — but how you answer the application questions matters. Brokers use your responses to assess whether you understand the risks of the strategies you're requesting.
Options Approval Levels Explained
Most brokers use a four-level system, though naming conventions vary slightly:
| Level | Strategies Allowed | Account Requirements |
|---|---|---|
| Level 1 | Covered calls, cash-secured puts | Margin or cash account |
| Level 2 | Long calls and puts | Basic trading experience |
| Level 3 | Spreads (bull put, bear call, iron condors) | Margin account, some experience |
| Level 4 | Naked options (selling uncovered calls/puts) | High account equity, significant experience |
Iron condors require Level 3. This is the standard entry point for most income-focused options traders.
What Brokers Ask on the Options Application
When you request a higher approval level, brokers typically ask:
Trading experience questions:
- How many years have you been trading options?
- How many options trades per year do you execute?
- What is your experience with specific strategy types?
Financial profile questions:
- Annual income
- Net worth (excluding primary residence)
- Liquid net worth
- Investment objectives (income, growth, speculation, etc.)
Knowledge questions:
- Understanding of how options work
- Familiarity with specific strategies
What to Say for Level 3 Approval
For Level 3 (spreads), you're demonstrating that you understand defined-risk multi-leg strategies. You don't need to be an expert — but your answers should reflect genuine familiarity with how spreads limit risk versus naked options.
Good answers for Level 3:
- Investment objective: "Income generation" or "Speculation/growth" (avoid "Capital preservation" for options)
- Trading experience: At least 1–2 years of options trading
- Trades per year: At least moderate frequency (12+ per year is reasonable)
- Familiarity with spreads: Yes — you understand that a spread buys a further-out option to cap risk
If your account is brand new and you have no options history, some brokers will start you at Level 1 or 2 regardless of what you write. Build a few months of Level 2 history first (buying calls and puts), then apply for the upgrade.
Broker-by-Broker Notes
Tastytrade: Tastytrade's approval process is typically straightforward for traders with some experience. They're options-first and tend to grant Level 3 relatively easily. Level 4 (naked options) requires higher equity and experience.
Tradier: Tradier's options approval follows similar criteria. Because Tradier is more of an API-first platform, they work with experienced traders. Applications are reviewed manually.
Schwab/Thinkorswim: Schwab is more conservative than Tastytrade. If you're denied, you can call and speak to a representative — often they can approve upgrades manually when you explain your trading background clearly.
IBKR: IBKR has a knowledge-based questionnaire. You need to pass an assessment to unlock higher levels. Study the questionnaire before submitting — the right answers aren't about gaming the system, they're about knowing what a vertical spread is.
What to Do If Your Request Is Denied
Denials happen, especially for Level 4 (naked options). For Level 3 (spreads), a denial is usually fixable:
- Call the broker directly. A phone conversation with a representative often works when an online application doesn't. Explain your experience and investment goals clearly.
- Add more detail to your application. If the online form allows free text, describe relevant experience specifically.
- Wait and build history. If you're new, spend 3–6 months trading at Level 2. Then reapply with an actual trade history to point to.
- Consider switching brokers. Some brokers are more conservative than others. Tastytrade and Tradier are known for being options-friendly.
How Tradematic Fits In
Tradematic is an automated iron condor trading platform that requires Level 3 options approval at your broker. Tradematic connects to Tradier and Tastytrade — both support Level 3 for qualified accounts. Once you have approval and connect your brokerage account, Tradematic handles all trade execution automatically.
If you're currently at Level 2 and want to use Tradematic, the priority is getting Level 3 approval at either Tastytrade or Tradier.
FAQ
Does paper trading require options approval? Most brokers allow paper trading (simulated trading) at any level. You can practice spreads in a paper account before getting live Level 3 approval.
Can approval be removed? Yes. If your account equity drops significantly or you have a period of inactivity, some brokers may review and reduce your approval level. This is uncommon but possible.
Does a margin account automatically mean Level 3? No. A margin account is required for Level 3, but having margin doesn't automatically grant higher options levels. You still need to apply.
What is the difference between Level 3 and Level 4? Level 3 covers defined-risk multi-leg strategies where all short options are paired with a long. Level 4 adds naked (uncovered) short options with no long to cap the loss. Level 4 requires higher account equity and experience and is not needed for iron condor trading.
Can I trade iron condors in an IRA? Some brokers allow spreads in IRAs, but IRAs cannot use margin. Tastytrade, for example, allows Level 3 strategies in IRAs with appropriate approval.
Once you have Level 3 at Tastytrade or Tradier, you're ready to connect to Tradematic. Start your 7-day free trial and let the platform handle iron condor execution automatically.
Related reading: How to Enable Options Trading on Tastytrade and How to Enable Options Trading on Tradier.
Trading involves risk and losses can occur. Past performance does not guarantee future results. Options trading is not suitable for all investors. Only allocate capital you are comfortable risking.
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