I would like to open a a brokerage account to trade NAKED options, need advice as to how I can open it?
I would like to open a brokerage account to trade naked options? its one of the most complex financial instrument, and getting approval from a brokerage firm all depends on the amount of experience and years you have been trading with them. I think my educational background is a good foundation for my understanding of the financial markets, but unfortunately that doesn’t merit anything with the brokerage firms for them to approve naked options trading. I got approval for straight option trading, but that’s not what I’m looking for. Any suggestion as to what kind of information or requirements that I can provide these brokerage houses that would approve my application? I’m mostly looking at online brokerage houses like Ameritrade and E-trade.
I would like to add more information to my question in order to clarify the question I’m trying to ask. I have an account with E-Trade that has been approved for level 3 trading, my account features include margin, selling uncover naked puts on equities, and buying and selling straight calls and puts. I’m interested in level 4 trading in E-Trade, which would allow me to sell uncovered puts and calls on the indexes. I have talked to E-Trade representatives about putting up a guaranteed amount of money that would allow E-Trade to liquidate my holdings automatically if it gets near that guaranteed amount. They informed me that it wasn’t as simple as that. I hope that clarifies the question that I’m trying to get answered. I’m trying to know what kind of information or lack of that would help qualify me for that level of option trading. Anyone with experience in the brokerage business would surely know exactly how to answer this question. What are some of the criteria that they follow?
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June 1st, 2010 at 3:46 am
Your net worth, hedging against unlimited risk is probably disqualifies. If you have net worth in excess of $200,000, it would still be maybe.
June 1st, 2010 at 4:22 am
About all you need is to establish a margin account. There is some minimum amount you need to get it established.
When you fill out the account application, indicate that you want to trade uncovered options.
I have a margin account and an IRA at etrade and I sometimes sell naked puts in the IRA, but can only sell naked calls in my margin account. Selling naked puts is much safer than naked calls since your loss cannot exceed the strike price of the put. If you sell a $10 strike price call and the stock goes to $ 100 you will lose your shirt.
June 1st, 2010 at 5:00 am
Personally, I think sogotrade is best among all online brokerages. You can get a lot of free trades: about 100 free trades with 500 minimum deposits. It has very good customer services, it also has live help, and you can chat with representatives about any question. After that, only 3 dollar for each trade, pretty sweet when compared with other online brokerages.
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