Comments on: Option Selling In Your IRA

By: Genius

Genius — Mon, 30 Apr 2012 15:23:35 +0000

Yes you can do these trades in an IRA account. But most of the large stock brokers will not allow it.
You need to find an option friendly broker that is willing to let you trade your own money how you desire.
I get really upset when people tell me they cant do these trades in an IRA because their broker lied to them and said it could not be done.

By: Aura

Aura — Mon, 30 Apr 2012 14:58:35 +0000

I am very interested in options, and I like the way You, The Genius approach this type of trading. I’m trying to understand, but I’m still very far from doing my own trades. Is it possible to put IRA money in an your Automatic Options account? How do I transfer the money and which brokers do this type of transaction? I understand I have to be a member, but I want to make sure this can be done, before I sign up.
You may e-mail me…this does not have to be a public answer.
Thank you!

By: Peter B.

Peter B. — Mon, 16 Jan 2012 06:05:03 +0000

Schwab is option ignorant. They refused to authorize Covered Call option selling in a non-IRA account for an associate. Almost any broker is better than Schwab for option trading.

By: Genius

Genius — Wed, 15 Sep 2010 00:40:18 +0000

I cannot say anything about Canadian accounts because I don’t know. But brokers have been lying to their customers in the states for a while now about what can and cannot be done in an IRA.

By: Ewald Wuschke

Ewald Wuschke — Tue, 14 Sep 2010 19:22:21 +0000

For Canadians, holding most types of options inside a Registered Account is a problem though. My broker would love to have all types of options inside Canadian Registered Savings Accounts (RRSPs, RESPs, TFSAs) but only permits purchase of Calls and Puts and writing Covered Calls due to Canada government regulations. I am surprised that the broker can do that much inside Registered accounts, because Section 22 of Canada Tax Interpretation Bulletin IT-320R3 specifically states that the purchase of a put inside a registered account is NOT a qualified investment. Buying Calls is permitted because they give you the right to acquire property. Buying Puts is supposedly not permitted because they give you the right to dispose of property, and registered plans are not supposed to hold investments that only give the right to sell (dispose) a property.

By: Thomas Zhang

Thomas Zhang — Sun, 05 Sep 2010 00:06:12 +0000

Fred,I have experiences in selling naked puts in retirement accounts.I did quite bit of selling,namely cash-carried puts,or covered puts.I had to have 100% fund to do the trade. For instance, I sold 3 contracts of cvs100910p70 not too long ago. I got a credit,but they held $21000.00 for maintenance until I closed the position..I intended to purchase CVX below 70 for a bargain if I could get,but if not I would get an income.The risk is if CVX has a free fall like BP, it would be a disaster for me.

Therefore,it depends on your plan.Naked put selling is usuallly a way to purchase a quality dividend stock at a lower price. If you simply want income, maybe sell a put spread and some brokers like Fidelity and Opitionshouse allow you to do spreads in a retirement account.

By: Fred Robertson

Fred Robertson — Thu, 26 Aug 2010 23:36:57 +0000

Does your broker allow you to sell naked puts in your IRA/Roth? If so, do you need to have enough cash set aside in the account to cover your put sell in case you are assigned the stock? My understanding is that you cannot have margin in an IRA or Roth. Is this correct?
Fred

By: Genius

Genius — Fri, 30 Jul 2010 15:59:33 +0000

Ken,
If you can predict the direction of the stock, how much it will move, and by when, then buying a put is your best bet. If you miss on any of those three you lose.

Or, you can just sell a call OTM and as long as the stock does not end up above your call price on expiration you make money. The stock could go down, do nothing, or even move up a little. You have a lot more room for error, and you get to play the part of the house/casino instead of the gambler.

By: Ken

Ken — Fri, 30 Jul 2010 03:32:07 +0000

This may sound like a dumb question but I don’t understand why one would want to sell call options when they can buy puts (and limit risk) if they are bearish on a stock?

By: Genius

Genius — Sat, 13 Jun 2009 19:45:24 +0000

In terms of selling options a Roth and a Traditional IRA are both the same. You can do these trades in both if your broker allows it.

You can ask who my broker is, but unless you are a member, I won’t tell you.