If I purchase an option with IRA money, can I cash it in in the money in less than 3 days?

Question

Does unsettled funds come in to play in options trading with IRA accounts?

Answer 1

OPM is incorrect in saying that you cannot buy options without a margin account. Many brokers allow some option transactions, including purchasing options, in a cash account such as an IRA.

The three-day settlement period applies to stocks, not options. Option trades have a one-day settlement. The trade settles on the next business day after the trade. Purchases must be paid for in full, and the proceeds from sales are credited to accounts on the settlement day. Some brokerage firms require settlement on the same day as the trade, when trade occurs on the last trading day of an expiration series.

Answer 2

It should not because firms that permit options require margin accounts to be used, so it should not.