Options trading


Understanding options

Options are a complex investment and are not suitable for every investor. There are several types of options strategies, each with unique risks.

Keep these points in mind when trading options:

  • Consider whether options fit with your investment goals, risk tolerance, and objectives.
  • You could see significant gains—or lose your entire investment—in a relatively short time.
  • You should consult a professional tax advisor to discuss how option strategies may impact your tax situation.

Before you begin trading, we recommend that you read the brochure, Characteristics and Risks of Standardized Options. We'll send you a copy if your option application is approved.


Learn more about options trading

Take an online class, watch a webcast, or try a virtual trading system.

The Options Industry Council's (OIC) website has a wealth of education about options, whether you're just beginning or an experienced options trader. Some topics you may want to explore include:

  • Basics.
  • Strategies.
  • Trading tools.
  • Education.

Start learning with OIC today » 


How to get started at Vanguard

To buy and sell options on underlying financial instruments that trade on major U.S. exchanges, you must have a Vanguard Brokerage account and be preapproved by Vanguard Brokerage to trade options in that account.

Our brokerage associates are available to answer your questions at 800-992-8327 Monday through Friday from 8 a.m. to 10 p.m., Eastern time.

Submit your application
Complete and submit a Vanguard Brokerage Option Application, one for each brokerage account that you intend to use for options trading.

Note: If you don't already have a Vanguard Brokerage account, you'll also need to open an account

Getting approval
In reviewing your application, we'll consider your account type and the information you provide about your finances, trading experience, and investment objective.

You'll receive notice of your approval or denial by mail.

We have four levels of options approval:

Level 1. Write covered calls, purchase protective puts, and write covered puts. (Margin approval is required to write covered puts.)
Level 2. Purchase calls and puts. Write cash-secured puts. (Includes Level 1.)*
Level 3. Trade equity and index spreads. (Includes Levels 1 and 2.)**
Level 4. Write uncovered (naked) puts. (Includes Levels, 1, 2, and 3.) **

* Available only through an associate. Call 800-992-8327.

** Available only through an associate. Call 800-992-8327. You must complete a Margin Account Agreement to be considered for these trading levels. 

Options are a leveraged investment and aren't suitable for every investor. Options involve risk, including the possibility that you could lose more money than you invest. Before buying or selling options, you must receive a copy of Characteristics and Risks of Standardized Options issued by OCC. A copy of this booklet is available at theocc.com. It may also be obtained from your broker, any exchange on which options are traded, or by contacting OCC at One North Wacker Drive, Suite 500, Chicago, IL 60606 (888-678-4667 or 888-OPTIONS). The booklet contains information on options issued by OCC. It's intended for educational purposes. No statement in the booklet should be construed as a recommendation to buy or sell a security or to provide investment advice. Call The Options Industry Council (OIC) helpline at 888-OPTIONS or visit optionseducation.org for more information. The OIC can provide you with balanced options education and tools to assist you with your options questions and trading.