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What options level do you need for covered calls?

At most brokers, covered calls sit in the lowest options level. Cash-secured puts are the catch: some brokers put them in that same level, others one step up. Level numbers don't match across brokers, so ask for the trades by name.

Options guide · 5-minute read · Updated 2026-10-28

The short answer

You usually need your broker's lowest options level to sell a Covered call. The shares you own back the trade, so brokers treat it as the starting point.

A Cash-secured put is less uniform. Some brokers include it in the first level. Others place it one step up, next to buying calls and puts. If you plan to run both halves of the wheel strategy, check where puts sit before you apply.

Broker by broker (as of October 2026)

Level names and contents change, and help pages online often disagree with each other. So this table only fills in a level where we found it on the broker's own page. Everywhere else, it tells you where to look.

Fidelity is the clear case. Its options FAQ lists selling covered calls and selling cash-covered puts together in Tier 1, the lowest tier. If another site says otherwise, the broker's own page wins.

Interactive Brokers works through trading permissions you request in your account settings, product by product. Check which strategies its options permission covers for your account.

Why the levels don't line up

Each broker builds its own ladder. One calls the first rung "Level 0," another "Tier 1," another "Level 1." Two brokers can both say "Level 2" and mean different trades.

So don't ask for a number. Ask: "Which level lets me sell covered calls and cash-secured puts in this account?" That question gets the same useful answer everywhere. My guide to options approval levels explains the common layout.

Your account type changes it

The same broker may give a different answer for each account you hold.

• Cash accounts usually allow covered calls. Puts must be fully backed by cash.
• Margin accounts may allow more, but the wheel never needs the top levels.
• US IRAs often allow covered calls and cash-secured puts, and usually stop below spreads.
• In Canada, covered calls are widely allowed in a TFSA or RRSP. Cash-secured puts there depend on the broker.

Check the level for the exact account you'll trade in.

What that first level lets you do (hypothetical)

An illustration, not a trade idea: you own 100 shares of a made-up stock, XYZ, bought at $40. You sell one 30-day call at the $44 Strike price for $0.80, collecting $80.

The lowest level doesn't mean the lowest risk. The shares still carry the full fall, as the first row shows.

Before you apply

1. Open your broker's own options help page, not a forum post.
2. Find the level that names covered calls and cash-secured puts.
3. Check it for the account type you'll use.
4. Fill in the form truthfully. See how to fill out an options application.

If you're turned down, why an options application is denied covers what to do next. If you're starting again after a loss, read what to do after losing money in stocks first.

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