Strategies for IRA

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Making Options Efficient in an IRA

Strategies for IRA

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Individual investors using IRA accounts have a few more obstacles than the average investor in their path to profits due to trustee restrictions. These restrictions have most affected strategies consisting of short options and long stock.

In today’s Strategies for your IRA segment, Tom covers a few strategies for decreasing the buying power required for IRA traders without diminishing the potential profits by too much so as to increase returns on capital at the end of the day.

The guys compare naked options to spreads to show the efficiency of buying an option against one that an IRA trader has sold. This increases the return on capital of trades like the Strangle or short put considerably by not using as much capital.

The segment concludes with a conversation on the pros of using vertical spreads in place of long stock. While spreads do not grant traders as much delta as the stock, those options strategies are significantly more capital efficient. Check out all these efficiency shortcuts above.

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