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Trading Permissions in an IRA

 

What can I do in my IRA?  Can I trade Options in my IRA?  Can I trade on Margin in my IRA?

 
 

Place Trade offers Traditional, Roth and SEP IRAs in a brokerage account1 any of which may be designated as a 'Cash' or 'Margin' type.

Please take the time to familiarize yourself with the following information which covers the trading permissions allowed as well as the restrictions (basically, what you can and cannot do) in each type of account.

 
 

 

CASH TYPE ACCOUNT

Permissions:

  • Long stock, bond, mutual fund
  • Long call and put options
  • Short calls if covered by underlying stock (which is then restricted)
  • Short puts if strike price is fully covered by cash (which is then restricted)
  • Option spreads where exercise style is European and long leg expires simultaneously or after short leg
  • Long or short futures* contracts (subject to a margin requirement which is generally 3x that of the requirement for non-retirement accounts)

 

Restrictions:

  • Must have sufficient (unrestricted) cash available to support all outstanding orders
  • Cash proceeds from sales not available for withdrawal or trading until settlement (generally 3 business days for stock, 2 for Forex* and 1 for options)
  • No short stock
  • No negative or debit cash balance (subject to immediate position liquidation in an amount sufficient to restore cash to non-negative balance)
  • Not allowed to hold a cash balance or position denominated in a currency different from the Base Currency of the account.
  • If the exercise or assignment of an option results in the delivery of either a long stock position for which the account does not have sufficient cash to purchase (e.g., call exercise) or any short stock position (e.g. put exercise) the account will be subject to liquidation.

 

 

 

MARGIN TYPE ACCOUNT

Permissions:

  • Long stock, bond, mutual fund
  • Long call and put options
  • Short calls if covered by underlying stock (which is then restricted)
  • Short puts if strike price is fully covered by cash (which is then restricted)
  • Options spreads where long leg expires simultaneously or after short leg (no exercise style restriction)
  • Long balance in non-Base Currency
  • Long or short futures* contracts (subject to a margin requirement which is generally 3x that of the requirement for non-retirement accounts)

 

 

Restrictions:

  • Reg T margin rules enforced (including Pattern day Trading rules)
  • Cash proceeds from sales not available for withdrawal until settlement (generally 3 business days for stock, 2 for Forex* and 1 for options). Unsettled funds may be used for trading
  • Cash proceeds from unsettled sales are available for trading as long as the subsequent purchase order does not settle prior to the sale order
  • No short stock
  • No negative or debit cash balance (subject to immediate position liquidation in an amount sufficient to restore cash to non-negative balance)
  • If purchasing a security or trading a product denominated in a currency different from the Base Currency of the account, a currency conversion must first be executed
  • If the exercise or assignment of an option results in the delivery of either a long stock position for which the account does not have sufficient cash to purchase (e.g., call exercise) or any short stock position (e.g. put exercise) the account will be subject to liquidation
  • Not eligible for Portfolio Margining

 

 

* Please note that Place Trade does not offer FOREX or Futures trading at this time. We have added this information for future use.

See or click here for instructions on upgrading an account from Cash to Margin type.

Glossary terms:
Base Currency
Option Strategies  

Related Articles 
IRA: Roth Conversions

Margin Requirements for Options

Margin Requirement on Leveraged ETF Products
How and When to Use a Direct Rollover
Considerations for Exercising Call Options Prior to Expiration

Retirement Planning

Traditional IRAs

Rollover IRAs

Roth IRAs

SEP IRAs

SIMPLE IRAs

Qualified Plans

401(k) Plans

 
     
 

1In addition to these retirement accounts PT offers 401(k), KEOGH, Money-Purchase, Profit Sharing, SIMPLE and other retirement accounts via mutual fund and other investment companies.  

 



Please Note:

Because of SEC restrictions, US legal resident customers are not allowed to trade non-US stock and cash index options.

For more information regarding fees please call us at 1-919-719-7200.

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Learn more about retirement planning by visiting some of the links below:

Roth IRA

SEP IRA

SIMPLE IRA

Traditional IRA

Qualified Plans

Rollover IRAs

Find out how Place Trade can help you get the most out of your college planning by visiting some of the links below:


Coverdell ESA

529 College Savings Plans

UGMA/UTMA Accounts