How Much Money to Trade Options? Minimums, Margin, PDT

You can buy a single option contract for as little as a few dollars, so there is no universal minimum. The amount you need depends on three things: the strategy (buying options costs the premium, selling cash-secured puts ties up strike × 100, and spreads tie up the width of the spread minus any credit), your broker's approval level and minimum balance, and, if you trade the same position in and out within a day, the day-trading margin rules. A small account can work with defined-risk trades. It is also easy to oversize a position in one.

Educational content only, not financial advice. Options involve risk and you can lose the entire amount you pay for an option. Do the math for your own situation.

This article is about the structure of account requirements. For a plain starter-budget walkthrough, see our guide how much money to start trading options. For sizing a trade inside a small account, see options trading small account and our options position size calculator.

The short version: cost by strategy

One option contract normally controls 100 shares. Quoted prices are per share, so the real cost is the quote × 100.

| Strategy | Cash or margin tied up | Maximum loss |

|---|---|---|

| Buy a call or put | The premium paid (quote × 100) | The premium paid |

| Covered call | 100 shares of the stock | Stock falls to zero, less the premium collected |

| Cash-secured put | Strike × 100 | Strike × 100, less the premium collected |

| Vertical credit spread | Typically the spread width × 100, less the credit (confirm with your broker) | Width minus credit, × 100 |

| Vertical debit spread | The net debit paid × 100 | The net debit paid |

The cash-secured put and spread figures follow standard options math. Schwab explains that a cash-secured put's requirement reflects its risk, and that buying a lower-strike put to form a vertical spread defines the risk and lowers the requirement. Your broker's exact formula can differ, so check it.

Example using made-up numbers: a $2.00 call costs $200 to buy. A cash-secured put with a $50 strike ties up about $5,000. A $5-wide credit spread that collects $1.50 has a maximum loss of ($5.00 − $1.50) × 100 = $350. These numbers are hypothetical and only show the arithmetic.

Your broker sets the next threshold: approval levels

Brokers sort options strategies into approval levels, and the level you get depends on the experience and finances you report. The numbering is not standard across brokers:

Webull: cash-secured puts and covered calls are Level 1. Spreads need Level 3, a margin account and a minimum $2,000 balance. Cash accounts, including IRAs, can apply for up to Level 2.
Schwab: covered calls are Level 0, vertical spreads need Level 2, and naked puts need Level 3.
Tradier: covered calls and cash-secured puts are Level 1, and spreads are Level 3.

The same strategy can therefore sit at a different level at each broker. Read your broker's approval matrix before you assume a strategy is open to you. See the Webull strategy list, Schwab's approval levels and the Tradier levels page.

The day-trading rule changed in 2026

For years, a margin account that made four or more day trades in five business days was labeled a pattern day trader and needed $25,000 in equity. That has been replaced. According to FINRA, the SEC approved the rule change (SR-FINRA-2025-017) on April 14, 2026. It removes the day-trade-count test and the $25,000 minimum equity requirement. In their place are intraday margin standards meant to keep a customer's equity in line with their exposure at any point during the trading day.

Secondary sources report that FINRA's Regulatory Notice 26-10 set an effective date of June 4, 2026, with brokers allowed an 18-month phase-in ending October 20, 2027. We did not confirm those dates against the notice itself, so verify them. Because of the phase-in, your broker may still apply the old rules. Ask your broker which day-trading standard applies to your account today.

The new rule does not mean a tiny account can day trade freely. Buying power now depends on real-time intraday margin, so a small account will still run into limits, and the per-broker details differ.

How to pick your own number

Choose the strategy first. If you only buy options, your required capital is the cost of the contracts you want to buy. If you sell options, work out the capital tied up per contract.
Decide your risk per trade. Many traders cap risk on any one trade at a small share of the account. That figure is a personal choice, not a rule. Run it through the position size calculator.
Check your broker. Look up the minimum balance, the approval level and whether you need a margin account.
Leave a buffer. Capital tied up in a cash-secured put or spread is not free for other trades. Commissions and contract fees also reduce a small account.
Consider paper trading first. See paper trading vs real money.

Common mistakes with small accounts

Putting most of the account into one cheap, far out-of-the-money contract. It is cheap because it has a low chance of paying off. See theta decay and options greeks.
Treating a spread as free of risk. The risk is defined, not zero. See credit vs debit spreads.
Ignoring wide bid-ask spreads on thin contracts. See bid-ask spread and slippage.
Trading without a plan for exits. See what is a stop loss and can you lose more than you invest in options.

FAQ

Is $100 enough to trade options? It can buy a low-priced contract at some brokers, but that does not make it a sensible budget. A single contract at $1.00 costs $100 and can lose all of it.

Do I need $25,000 to day trade options? The FINRA rule requiring that was replaced after SEC approval in April 2026. Whether it still applies to you depends on your broker's phase-in, so ask your broker.

Can I trade options in an IRA or cash account? Often yes, at lower approval levels. Webull, for example, says cash accounts including IRAs can apply for up to Level 2.

Sources

Disclosure: This article is educational and is not personalized investment advice. Options trading is risky and not suitable for everyone. The numerical examples are hypothetical.