I'm thinking of moving my IRA to a brokerage that permits me to trade options on futures, mostly S&P futures options. Can anyone recommend a good brokerage? Foremost on my mind is low commissions. Thanks, Richard
Just a note. Trading Options on futures(I assume you mean Long premium & spreads) would be considered a high risk strategy ,and probably not suited for IRA's , KEOGH's and other retirement accounts. I do not handle customer accounts and I am not sure this strategy is allowed. The only option strategy allowed (last time I checked , several years ago), was covered call writing in a IRA. Covered call writing was allowed, but selling puts was not(mathematically the same), don't ask me why. I would suggest you take more of a conservative approach to a retirement account and invest for the long term. Gene Weissman Lieber & Weissman Sec., L.L.C. gweissman@stocktrade.net
I know that a number of retail Daytrading firms will allow you to trade your IRA, though I personally dont think it should be allowed. Your IRA should be, again this is all IMHO, set aside for more conservative investment strategies. Trading should be a approached as a business, not a retirement plan.
also , talk to an attorney or CPA. While the IRS has liberalized the choice of vehicles that IRA's can be invested, there is much grey area concerning the FREQUENCY of trades made in IRA's.
Most Futures Brokers can set you up with an account allowing you to trade any futures options strategy in your IRA. Its done through a Trust and can be done because with futures your IRA money is considered a performance bond against the contract (equity/stock margin is considered to be a loan which excludes those types of accts). Not recommending you do this, just letting you know your options.
Thanks all for your input. What I'm hoping to do is to trade way out-of-the-money credit put spreads on the S&P futures. The spread would be put on quarterly (i.e. three months to expiration) and the strike price of the short put would be about 15% OTM with the current S&P futures value. This strategy, in backtesting from 1982 had a 91% success rate (i.e. the options expired OTM). There's a bit more to this strategy but I'll leave at that for now. This appears to me to be a rather conservative options strategy so I thought it might be good to use with my IRA. As I alluded above, I would only trade about 4 times a year. What do you think? Also, will I be able to use the SPAN dictated margin requirements or is it going to be more restrictive (i.e. requiring more margin) in an IRA? Richard
You will be able to use SPAN margin in your IRA. Just talk to the broker about this before opening the acct (some brokers always use higher than SPAN, just weed them out before hand).