My husband and I are wanting to start option trading. We have been looking into brokerages and have decided we will probably go with Scottrade. But this weekend I talked with someone who was denied an options account from Scottrade. For what reason would someone be denied?
2006-10-02 11:07:08 · 10 answers · asked by justwondering 5 in Business & Finance ➔ Investing
Scotttrade in general focuses mainly on very basic options trading, generally straight calls and puts. If you're going to do any "specialized" / "advanced" options trading, you'll probably want to look into firms such as optionsxpress, thinkorswim, or interactivebrokers.
All three of these have been ranked very high by most publications for a few years now. And there's a reason for it.
I know people who use each of these and it's night and day between these brokers and the scotttrades, ameritrades, and the like. It's an even BIGGER difference between these firms and the Fidelities of the world (who are totally awful when it comes to any advanced trading).
Anyways, check out their info pages to see if they'll "in general" allow you to do the types of trades you're looking to do. If they do, go ahead and resubmit your options/margin application (this is common) and see if they'll approve you for at least level 3.
Pls email me offline if you have any questions or if I can be of further assistance with your applications and/or brokerages.
Hope that helps!
2006-10-02 11:21:31 · answer #1 · answered by Yada Yada Yada 7 · 1⤊ 1⤋
Options trading requires a supreme credit record and a lot of reserve capital. While it's possible to make money (though it's very, very unlikely), it's also possible to loose considerably more than you invest, in which case you need to "pay up" the money you will owe. A brokerage is not going to give an options account to someone they can't collect from if that person owes them a bundle of cash.
As a bit of free advice (worth every penny you paid for it!) I would strongly advise against options trading unless you have many years experience in "regular" brokerage transactions. One bad move can lose you considerably more than you probably have, and you can't just "declare bankruptcy" and make it go away. Someone will get mad and come for their pound of flesh!
2006-10-02 11:30:30 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Options are very risky.
They will deny you if you don't have enough experience trading, or not enough finances to justify the risk.
I do all my trading in an IRA, and can only do covered call options. They are the safest, and I only recently got good at it. If you are denied options, you might be able to get approved only for covered calls because they are much safer.
2006-10-02 11:28:22 · answer #3 · answered by Anonymous · 0⤊ 0⤋
Yes, it's about 'suitability' for you. If you don't have any investment experience with stocks at all, you probably won't get approved for option trading, except for what is called 'covered call writing.' Covered call writing means selling call options on stock you own, which is really a bit more conservative than outright stock ownership. After some experience with that you can probably get upgraded to option buying which is what it sounds like you want.
2006-10-02 11:13:58 · answer #4 · answered by ProfessorOddlot 4 · 1⤊ 1⤋
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2015-01-25 00:26:02 · answer #5 · answered by Anonymous · 0⤊ 0⤋
1
2017-02-19 21:07:43 · answer #6 · answered by verna 4 · 0⤊ 0⤋
It is rather a bummer, isn't it? I have been denied the ability to write naked calls and puts, even though I am allowed to short stocks. I would like to know what the difference is?
2006-10-02 13:16:13 · answer #7 · answered by Anonymous · 0⤊ 0⤋
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2014-09-25 02:15:40 · answer #8 · answered by Anonymous · 0⤊ 0⤋
They can deny you if they think you're inexperienced in stock and options.
2006-10-02 11:09:50 · answer #9 · answered by hahagoodguy 2 · 0⤊ 1⤋
Yeah it might be correct
2016-07-27 13:15:40 · answer #10 · answered by Anonymous · 0⤊ 0⤋