Options trading with TDAmeritrade?

Hello community

My current broker (AMTD) has 4 levels of option trading opportunities, I will focus on the first two:

Level I (Covered):
Covered call writing
Cash-secured put writing

Level II (Long)
Covered call writing
Cash-secured put writing
Purchase of calls and puts

I, basically, wanted to simply trade option contracts, so I have applied for the access to the second level. Unfortunately, I was approved for level 1 only. I do not quite understand the conditions of this level. I have also got a response from helpdesk:

“Your account is set up to allow covered call positions and cash-secured put positions. With a covered call, you can write a Call option if you hold the underlying stock. A cash-secured put is when you write a Put option if you hold enough funds in the account to cover the option if it is assigned to you. You can write an option online if you go to Trade, then Options. The type of order will be Sell to Open.”

Does this mean that I cannot buy any option contracts but only to create them? For example I can create a call, with the stock in my portfolio, and vice versa with the put – and THAT’S IT? I was really looking forward to buying and selling contracts, not creating them, and if that is something I cannot do for now, well that just sucks.

I am not quite ready yet to trade options, but I would really like to have a decent and simple explanation of this Level1 trading opportunities.

Incoming search terms for the article:

This entry was posted on Thursday, April 22nd, 2010 at 1:11 am and is filed under online options trading. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

2 Responses to “Options trading with TDAmeritrade?”

Common Sense Says:
April 22nd, 2010 at 1:49 am
You can buy puts & options. If you own them…. you can sell them. You can also sell a call against a position (covered call) and write (sell) a put a long as you have the funds to cover it.

TD Ameritrade has a division called ThinkOrSwim. They are 1000X’s better in stock trading and the best broker in the USA for trading options. You should consider them (just for the regular webinars they have, let alone the many other tools).

Also check out;
http://www.redoption.com/
http://www.optionplanet.com/assembled/list.html

If you don’t understand the “Greeks” you’ll make some major mistakes (even if all you’re doing is the most basic of Options Trading). In short…. you’ll get killed.
James Says:
April 22nd, 2010 at 2:15 am
It seems from the conditions that indeed you have an account that is incapable of buying call or put options. It seems like you are approved only for covered call and covered puts.

You might want to try the broker that I use which approves you for call and put buying right from level 1 : http://www.optionsxpress.com .

For more choice of brokers, you can refer to the list in the page below:

Options Trading Tutorial