What is a requirement for customers prior to buying an option?

The correct answer indicates that customers do not need to complete the options agreement prior to entering an order for options. However, it is essential to understand the context of this requirement to grasp the nuances of trading options.

When engaging in options trading, customers are typically required to complete an options agreement, known as the options disclosure document, which outlines the risks and features of options trading. This completion must happen before the customer can develop significant activity in options trading. However, customers can place an order for an option transaction before the agreement is completed. This means that while the agreement must be finalized before the settlement of any options trades can occur, the order can be placed beforehand. It is a common practice for brokerage platforms to facilitate orders before all documentation is completed, so long as the documentation is ultimately submitted within the required time frame.

In contrast, other choices suggest conditions that do not align with the regulatory framework governing options trading. For example, customers are not required to pay taxes before purchasing options, nor is a minimum account balance a universally imposed requirement. While brokerage firms may have their own requirements regarding account balances, there is no standard rule stating that customers must maintain a specific minimum balance to enter options trades. Thus, understanding that customers can place orders before completing the