A cash account is defined as a brokerage account that does not allow for any extension of credit on securities. This includes retirement accounts and other non-retirement accounts that have not been approved for margin. While customers may purchase and sell securities with a cash account, trades are only accepted on the basis of receiving full payment in cash for purchases and good delivery of securities for sales by the trade settlement date.
If a cash account customer is approved for options trading, the customer may also purchase options, write covered calls, and cash covered puts.
Short selling, uncovered option writing, option spreads, and pattern day-trading strategies all require extension of credit under the terms of a margin account and such transactions are not permitted in a cash account.