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Options Trading Risk: Approval Levels and Common Ways Retail Traders Lose Money

Options and Derivatives • Beginner Investing • 7 min

Most U.S. brokers require you to apply for and get approved at different "options trading levels" before you can use certain strategies. This isn’t just red tape. There’s a real difference in risk between the types of strategies. Lower approval levels usually allow defined-risk strategies like covered calls and cash-secured puts. With these, you know the maximum loss in advance. Higher levels need more trading…

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