SteadyOptions is an options trading forum where you can find solutions from top options traders. TRY IT FREE!

We’ve all been there… researching options strategies and unable to find the answers we’re looking for. SteadyOptions has your solution.

OptionsPro

In which account is it best to trade?

Recommended Posts

 

Hi, I hope everyone's doing good.

I was hoping to trade options in my TFSA and/or my RRSP account for obvious tax advantages, but some of the Steady Options trades are not allowed because we can't write naked contracts in registered accounts. Is this right or am I missing something? Is there a brokerage that allows selling naked contracts? Is it a good idea to only trade in the registered accounts the trades that are allowed and the other ones in the margin account, or is it a bad idea because the SO performance is based on compound interest?

Thank you!

 

Share this post


Link to post
Share on other sites
15 minutes ago, CJ912 said:

I have never seen any naked options being used in SO strategies

Is it because there is always a call/put option to offset the written contract in the SO strategies? If so, I agree, but when I called Questrade, they said I still cannot do the trade because I would actually need to own the 100 shares. If I don't, then it's not a covered contract and I can't do it.

I am looking to start using Interactive Brokers.

Edit: also be aware that I am still new to the options world so I may be wrong and I may be missing some stuff.

Edited by OptionsPro

Share this post


Link to post
Share on other sites

Here is what you can trade with IB in RRSP and TFSA accounts:

  • Stocks listed on designated US and Canadian exchanges (excluding Venture-NEX segment and CSE single listed stocks)
  • Long equity call options
  • Long equity put options
  • Short equity call options with a fully covered position (covered call)
  • Long equity put options with a fully covered position (protective put).
  • Long put/call options on indices.
  • Warrants/Rights if the underlying asset acquired under the right to purchase is a qualified investment.
  • U.S. Bonds.
  • FX conversions limited to USD/CAD

https://www.interactivebrokers.ca/en/index.php?f=13406&p=rsp

So unfortunately SO strategies will not be allowed. I suspect other Canadian brokers will be no different, not sure about US brokers. 

 

Share this post


Link to post
Share on other sites
1 hour ago, Kim said:

Here is what you can trade with IB in RRSP and TFSA accounts:

  • Stocks listed on designated US and Canadian exchanges (excluding Venture-NEX segment and CSE single listed stocks)
  • Long equity call options
  • Long equity put options
  • Short equity call options with a fully covered position (covered call)
  • Long equity put options with a fully covered position (protective put).
  • Long put/call options on indices.
  • Warrants/Rights if the underlying asset acquired under the right to purchase is a qualified investment.
  • U.S. Bonds.
  • FX conversions limited to USD/CAD

https://www.interactivebrokers.ca/en/index.php?f=13406&p=rsp

So unfortunately SO strategies will not be allowed. I suspect other Canadian brokers will be no different, not sure about US brokers. 

 

Kim, can I ask a separate question regarding IB? How much commission do you pay for trading 1 contract SPX? I know IB has minimal $1.00 for option but exchange also charges extra fees. Is it $1.00 + exchange fee or $0.65 + exchange fee for 1 contract? I am trying to compare fees between IB and TD. TOS was down this morning again and that makes me want to switch to IB but the only concern is the minimal fee for options. The total fees for 1 SPX for TD is $0.65 + $0.58 which will be cheaper if IB charges minimal fee of $1.00 per contract. Thank you.

Share this post


Link to post
Share on other sites
48 minutes ago, Sam Chen said:

Kim, can I ask a separate question regarding IB? How much commission do you pay for trading 1 contract SPX? I know IB has minimal $1.00 for option but exchange also charges extra fees. Is it $1.00 + exchange fee or $0.65 + exchange fee for 1 contract? I am trying to compare fees between IB and TD. TOS was down this morning again and that makes me want to switch to IB but the only concern is the minimal fee for options. The total fees for 1 SPX for TD is $0.65 + $0.58 which will be cheaper if IB charges minimal fee of $1.00 per contract. Thank you.

The minimum of $1 applies only if you trade only 1 contract - which I don't. Average fee is around 0.70, sometimes less. I haven't traded SPX for a while, but yes, index options like SPX or VIX are higher. The question is how often you trade them?

Share this post


Link to post
Share on other sites
1 hour ago, Kim said:

The minimum of $1 applies only if you trade only 1 contract - which I don't. Average fee is around 0.70, sometimes less. I haven't traded SPX for a while, but yes, index options like SPX or VIX are higher. The question is how often you trade them?

Not that often, probably three times a week. And 1 contract each time, so it will make a small difference.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account. It's easy and free!


Register a new account

Sign in

Already have an account? Sign in here.


Sign In Now

  • Similar Content

    • By Mikael
      I'm not sure if i'm the only Canadian at SO but just in case there are others what broker are you using for your registered account?
       
      I'm with Questrade right now and they are charging 6.95 ticket + 75c a contract on options (with the QT advantage package) , but they let you keep USD in your RRSP and TSFA accounts. 
       
      Have anyone tried negotiating with them on reducing the commission to match IB? I really hate to split up the accounts but seeing how IB is only 70c flat i seem to have no choice. 
    • By cwelsh
      Several people have asked if our strategies can be implemented in IRA accounts.
       
      The short answer is yes, but it depends on the broker.
       
      The longer answer is "not exactly as it is done on this site."  
       
      First, some brokers won't allow it. This is unusual, but I have come across brokers who won't allow option trading in IRAs.  Find this out before you open an account.  Second, the rules are different.  IRAs basically can't use margin trading and everything has to be cash secured.  
       
      Let's say I have 4 positions in my account:
      Long 100 shares of AAPL bought at $120 (stock price at $120)
      Short 1 call of AAPL at the $110 strike, sold for $5
      Long 10 puts of XOM at the $50 strike bought for $10 (stock price at $60)
      Short 5 puts of XOM at the $40 strike (sold for $5)
       
      In a non-IRA account, enabled for margin, there will be no issue with these positions when opened.  If AAPL moves up a LOT or XOM moves down a lot, your account may go into a margin call eventually (Reg-T call), but you likely can satisfy that by closing the positions.  If you have a regular account, you may have noticed from time to time that your "available funds for trading" goes into a negative amount as positions move around.  
       
      On the other hand, in an IRA, you will have to have the cash already in the account for potential losses on the trade.  So on the AAPL trade, in addition to those positions, you'll also have to have $500 in cash.  (As if the price stays above $110, you stand to lose $500).  The same goes on the put side.
       
      You see this in Anchor as well.  If we have a long put at 390 and sell the 400 put, we have to have that $10/contract ($1000) on deposit in cash in an IRA, whereas in a regular account, you likely won't.  
       
       
  • Recently Browsing   0 members

    No registered users viewing this page.