This segment focuses on the choice that many young or new traders will have to make when they open a brokerage account, should it be an IRA account or a margin account? We provide the info here that can help you make your choice an informed one.
Two tables laid out the pros and cons for IRA accounts and for margin accounts. There are strengths and weaknesses Meta: This segment focuses on the choice that many young or new traders will have to make when they open a brokerage account; should it be an IRA account or not? for both. A weakness for IRA accounts is related to the tastylive method of trading. Some of our best strategies cannot be used in IRA accounts. Some strategies, such as debit and credit spreads can be used in either and there is no real difference.
A big difference is in selling naked options. An IRA account cannot sell naked calls and puts must be cash secured. A theoretical trade selling a put in GDXJ was displayed showing the similarities and differences between an IRA account and a margin account including the credit received, max profit, buying power reduction (BPR) and max potential return on capital (ROC).
A second table was displayed of a short Strangle position in Pandora (P). The table showed the position, credit, total credit and buying power reduction. This is a trade that cannot be placed in an IRA account.
Watch this segment of “tasty BITES” with Tom Sosnoff and Tony Battista for the takeaways and to learn both the “pros” and cons” of trading either in a Margin or IRA account.
This video and its content are provided solely by tastylive, Inc. (“tastylive”) and are for informational and educational purposes only. tastylive was previously known as tastytrade, Inc. (“tastytrade”). This video and its content were created prior to the legal name change of tastylive. As a result, this video may reference tastytrade, its prior legal name.