I asked both TD and RBC about their option trading.
"Please note that RBC Directing does not support Option Spreads.
We require a minimum of $100,000 in account equity before we'll allow naked put writing. Each account approved for naked put writing must have and maintain the minimum equity requirement within the account. You must contact us by telephone to discuss applying for Naked Puts.
Because of the inherent risk that is related to naked put writing, a higher minimum is required. When investors write naked put options, they are exposing themselves to the risk of being assigned at any moment (for American style put options), which would require an immediate outlay of cash. By writing a naked put option, you are giving someone the right to force you to buy equities (possibly in very large amounts) at a moment's notice. "
"Please note that the account must be approved for option trading during the account opening process where TD Waterhouse determines what level of option trading suits your account details; there are no guarantees. We do calls, puts, spreads, naked calls and puts. In regards to margin requirements for naked option trading, the account itself must have a minimum equity of $10k either in cash or holdings."
Scotia iTrade at least publishes its option trading margin requirements at https://www.scotiaitrade.com/helpcentre/lcmtoor1.shtml
There are five levels of option trading authorized at Scotia iTRADE . Before you can start trading options your account must first be approved for the type of trading you propose to do.
Level 1: Covered Writes (no minimum)
Level 2: Purchases (calls & puts) - no minimum
Level 3: Spreads (not permitted for registered accounts) - $10k minimum
Level 4: Naked Puts (not permitted for registered accounts) - $25k minimum
Level 5: Naked Calls (not permitted for registered accounts) $100k/$500k min. for equities/indicies
Please note: A margin account is required for all non-RSP option trades.
If you want to trade in options using one of the big banks as brokers, it looks like TD Waterhouse or Scotia iTrade are MUCH better choices than RBC.
With RBC, you cannot even do spreads and the margin requirements are a lot higher for Naked Puts etc.
I did not ask BMO about their policies since their commissions on options trading is TOO high in my view.
Out of the big banks, it looks like TD Watehouse or Scota iTrade are the way to go for Options trading.
But since Scotia iTrade has MUCH HIGHER margin requirements than TD Waterhouse (and some may not like the platform or service form Scotia iTrade as much), TD Waterhouse will likely be the best choice for many options traders choosing to use one of the big banks for their broker.
I hope this helps others trying to figure out which broker to use. It took me awhile to gather all the info on the polices, prices and margin requirements that the big banks have for options trading.