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Options 101
Options Approval Levels: What Each Tier (1-4) Actually Lets You Trade
Before you can place your first options trade, your broker assigns you an approval level. Here's what the tiers mean — and which one a SPY scalper actually needs.
NoVo Options Trading · 2026
Options carry more risk than shares, so brokers gate access behind approval levels. The exact names vary by broker, but the ladder is roughly the same everywhere — and knowing where you need to be saves a frustrating rejection on your first trade.
The typical ladder
Level 1 — the most conservative: covered calls and cash-secured puts (strategies backed by stock or cash).
Level 2 — buying long calls and long puts. This is the tier a directional SPY trader lives in.
Level 3 — defined-risk spreads (verticals, debit/credit spreads), which involve a short leg with capped risk.
Level 4 — naked/uncovered options, the highest risk, requiring the most capital and experience.
To buy SPY calls and puts — the whole manual-scalp game — you need Level 2. Spreads need Level 3.
What a scalper needs
If your plan is buying SPY calls and puts off the levels — the core manual scalp — Level 2 is enough. You only need Level 3 if you intend to trade spreads like a debit spread. Level 4 is rarely necessary for this style and comes with serious capital requirements.
Getting approved
Approval is a form: the broker asks about your experience, income, net worth, and objectives, then assigns a level. Answer honestly — the gate exists to keep beginners out of positions that can lose more than they put in. If you're new, Level 2 (buying options, where your max loss is the premium) is the right and safe place to start.
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NoVo is a software tool for market analysis and for executing trades you initiate, not financial advice. This article is general education, not investment advice. Options trading involves substantial risk of loss, up to and including your entire capital. NoVo makes no guarantee of profit, win rate, or performance, and past results do not predict future outcomes. You are responsible for your own broker account, configuration, and trading decisions.