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Options can NOT be bought on margin.
Norman E.
Moe Drippins wrote:
>
> THE DOCTOR writes:
>
> > The speaker was absolutely wrong. Leaps are options in every
> > aspect.
>
> Correct.
>
> > However options can be done in IRA's. The only issue with using
> > options is the use of leverage. So if a call is bought in an IRA ...
> > the money market in the IRA must have the full strike on deposit.
>
> This is true an ANY account, no? I don't think any options can be
> bought on margin; at least that what it says on the Series 7 tests,
> which are somewhat outdated. You can buy them in a margin account,
> but must be paid for in full.
>
> > Having said all of that a brokerage firm may not chose to do the
> > business .. so you simply may need to find one that allows it. Very
> > few allow any strategy other than covered call writing without a
> > specific exemption from their Senior Register Options Principal so
> > most brokers just say they don't allow it.
>
> Fidelity allows me to buy puts and calls and write covered calls. As
> you say, it's by broker. MOST brokers don't have the infrastructure to
> pledge your cash, so those who don't won't allow covered puts either,
> since they have no way to mark the cash you'd be using to cover the
> put as "used" (collateralized, pledged, etc.).
>
> > Fidelity simply won't do it
>
> Not entirely true; my fidelity IRA account allows: Covered writing,
> equity & index purchases (this is a direct cut/paste from my account
> screen)
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