There are two issues with all option trading in retirement accounts. First there is no legal restriction on any strategy or product in any form of retirement accounts. Cash products, options and even futures are legal as long as the strategy or exiting the strategy does not require the account to borrow. So the strategy needs to be well capitalized. So there has been lots of discussing of spread trading and cash secured put trading as being allowed. This is true, but bear in mind if you lift a leg the brokerage house either will stop you or automatically lift the other leg. Cash secured puts are common, but again keep in mind when you de leverage the put it is simply the same economics as the covered call with fewer entry positions. Not necessarily less exit positions
The second issue with retirement accounts is that there is also a trustee for the account and this is where things can get sticky. In some cases the brokerage has uses an arms length in house trustee or uses and outside trustee. The trustee can also set standards which may or may not align with the brokerage houses ambitions. This trustee relationship is often where the strategy restrictions may reside. Some years back a Chicago based trustee that allowed futures in IRAs actually failed due to fraud - not the strategies just simple fraud. It is not uncommon that the restriction comes from the trustee. Is on outside trustee better or worse - who knows we could debate forever. Many argue that if your IRA exceeds SIPC protection and outside trustee could be a good idea
On another topic and just a personal cautionary note. This is proving to be a very difficult time for many of the paid educational services. I would expect to see a ton of free deals and a major increase in advertising and offers, probably even more consolidation. IMHO and this is my personal opinion only I would be very cautious here of prepaying and extended education program or buying anything that requires lot's of ongoing support with a really good sense that the vendor has a viable balance sheet. These are tough times in the paid educations business and IMHO we will see fewer players on the other side of the current economic environment.
Good trading
ISE educational presentations are now available via the iTunes Music Store. Visit Option Education @ Your Fingertips for free ISE podcasts. Sent from my Blackberry. Alex Jacobson ajacobson@ise.
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