As part of our ongoing administration of the firm’s Options Trading program, we routinely review policies and procedures, including financial qualifications for customers applying to trade Options.
Effective February 1st, ESI will implement updated financial requirements for Options trading.
Current Requirements
Level I:
- Covered Call Writing:
- Client Income: $50,000/year
- Liquid Assets: $25,000
- Net Worth (excluding residence): $75,000
- Short Puts: Not permitted
Level II:
- Long Calls and Puts (including long straddles):
- Client Income: $75,000/year
- Liquid Assets: $25,000
- Net Worth (excluding residence): $100,000
- Spreads and Combinations: Not permitted
Updated Requirements
Level I:
- Covered Call Writing:
- Client Income: $100,000/year
- Liquid Assets: $50,000
- Net Worth (excluding residence): $150,000
- Short Puts: Not permitted
Level II:
- Long Calls and Puts (including long straddles):
- Client Income: $150,000/year
- Liquid Assets: $50,000
- Net Worth (excluding residence): $200,000
- Spreads and Combinations: Not permitted
It is important to note that meeting the updated financial requirements does not guarantee approval for an Options trading strategy. The firm conducts a comprehensive suitability assessment of the account’s investment profile, which includes, but is not limited to, the financial qualifications listed above.
Registered Representative (RR) Requirements
- Approval Process: RRs must be approved by a Branch Office Supervisor (BOS) to offer Options trading to customers. Once approved, the RR may request Options trading access for their clients.
- Options Disclosure Document (ODD): The most recent ODD must be provided to all customers applying for Options trading. Upon RR approval, ESI Operations will supply the necessary ODD paperwork for customer delivery.
Additional Notes
- ESI currently supports Level 1 and Level 2 Options trading.
- IRA accounts and ESI Directions accounts are limited to Level 1 trading strategies.
For questions, please contact the ESI Brokerage Suitability team at 1-800-344-7437 (option 2, option 5, option 1).
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