Conference nyoss1::market_investing

887.0. "Buying options or selling short on IRA account" by EVMS::HALLYB (Fish have no concept of fire) Wed Jul 12 1995 09:48

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Note 383.0       Buying options or selling short on IRA account        4 replies
MROA::SRINIVASAN                                     11 lines  11-JUL-1995 11:49
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        I was told by Charles Schwab that I cannot buy options or sell short on
    my IRA account. However I can only write calls/put against the stock I
    already have. However a Charles Schwab broker told me that some firms
    allow people to buy options or sell short on IRA account ( Just Charles
    Schwab doesn't do this ).

    Has any one bought options or sell short on IRA account with other
    brokers ?!

    Jay

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Note 383.2       Buying options or selling short on IRA account           2 of 4
GONE::LANDON                                          6 lines  11-JUL-1995 13:14
                       -< Option trades with your IRA?? >-
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    Paine Webber will not let me trade options (calls/puts) from my IRA
    account also. I was told that options being as speculative as they are
    is the basic reason. As far as my personal account is concerned anything 
    goes with options whether I own a stock or not. 
    
    TL
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Note 383.3       Buying options or selling short on IRA account           3 of 4
ICS::VERMA                                            8 lines  12-JUL-1995 08:54
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    Fidelity has same restriction on my IRA account. I can only
    write covered calls/puts. 
    
    Naked calls/puts are OK from another account but not from IRA.
    It may have something to do with SEC financial disclosure 
    requirements for a margin account which are not required for
    opening an IRA account.
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Note 383.4       Buying options or selling short on IRA account           4 of 4
GLRMAI::WILKES                                       17 lines  12-JUL-1995 09:27
                           -< IRA Rules Make Sense >-
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    In general buying options and selling options short are not sensible
    activities for an IRA account. Brokerage firms undoubtedly do not allow
    it because they would be pilloried by both the government and the IRA
    account holders themselves if through bad guesses IRA investors
    squandered their savings for their "golden years".
    
    In addition, if short selling of index puts and calls were allowed the
    rules involving annual IRA contribution limits would inevitably become
    a sticky issue. How many IRAs would have had enough equity in them to meet the
    requirements that would have been placed on an IRA account holder who
    was short OEX puts on Oct. 19, 1987?
    
    If you don't have enough assets outside your retirement accounts to
    speculate in options, you should not be trading options anyway.
    
    Lyndon

    The preceding was moved from DIGITAL_INVESTING.
    
      John (moderator)

    	Shearson won't allow options-playing from IRA accounts except
    	for the writing of covered calls.