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Requirements for options trading?

post #1 of 4
Thread Starter 
What are the requirements to open an options account? Scottrade denied me.. said I don't have enough income, credit, or experience... (I'm 18). Just wondering what I need? Like I know for margin you need 2k and decent credit..are there specific things for options?
post #2 of 4

I'm new to options trading as well, but might offer some advice:

 

I was able to gain access to options through nepotism but if you don't know anyone you might not be as lucky.

 

What kind of starting capital do you have? I know Scott and Schwab will both allow you to write covered puts and calls. They require you to have the funds available in your account in the event you're assigned. The money will be withheld until expiration.

 

No brokrage is going to allow an inexperienced investor to write naked calls until you develop extensive history, experience, and a large enough purse. And even then, you still might be denied. Call a brokrage and ask about "covered puts" and "covered calls" and you should be given a green light.

 

Just remember, each contract = 100 shares...so you'll want at least $1,000 starting.

 

Have you considered Options House (www.optionshouse.com/rates/)? Their rates are pretty low, but I'm not sure what tools they have to offer. The benefit of having low commissions means you can write out of the money Puts that are close to expiration and still turn a profit (even if it's just pennies).

 

However, if you have Schwab or Scott, you'll have to pay ~$10 in commissions which makes selling a 10cent put worthless. You may be willing to gamble on higher bets, but for the purposes of learning, safer strategies are what I'm after.


Edited by po0dingles - 6/9/11 at 1:56pm
post #3 of 4

bump

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