Another motivation for CashAcct is: the PDT rule does not apply to CashAcct, meaning one can do many daytrades if enough cash is avail and one follows the T+1 settlement rule (options) and T+2 settlement rule (stocks). See also this posting https://www.elitetrader.com/et/thre...y-to-cash-accounts.368400/page-5#post-5640814 And the following posting is interesting too as it shows another similar unfair discriminatory practice by the brokers applying for the disadvantage of the trader: https://www.elitetrader.com/et/thre...y-to-cash-accounts.368400/page-6#post-5640911
Like I said before, There are brokers who will even require options trading to be cash-secured meaning that you are not allowed to borrow any margin to carry out options trading in that the entire potential loss from the options trading will be covered by the trading capital in your account. But almost all of the brokers will require options trading to be carried out in a margin account and not a cash account given that options is a leveraged product by nature. I dunno why it's so hard to understand.
You are trying to justify an incorrect fact. Any loss is limited to the cost of the option. You can legally buy options in a cash account. I suggest you read the following link https://www.stilt.com/blog/2021/08/margin-vs-cash-account-webull-a-guide/ It is typical of industry practice.
Hey TheDawn, options are not a leveraged product! Or just show (prove) that any standard option has any leverage. And how much is the leverage? 2x, 10x, 100x ? As said: YOU HAVE ZERO CLUE OF OPTIONS! I EVEN DOUBT YOU HAVE EVER TRADED ANY OPTION! So, just STFU!
I thought you put me in your "kill file". Still can't resist responding to me? LOL You pathetic loser! LOL You have no idea what an option is. Read the following: https://www.optionstrading.org/introduction/terms-phrases/leverage/
Like I said before again, that's called cash-secured which means that you are only allowed to trade in options in the amount that's completely covered by your trading capital. But any options trading is typically only permitted in margin accounts because options is a leveraged product. Some brokers are allowing options trading in cash accounts as many of you have pointed out. Imo, that's quite imprudent and does not make sense.
@TheDawn village idiot wrote You have found a fool as a companion! The author of the above text has no clue of options, as much like as you. He's misinterpreting the premium of an option as well the true meaning of "leverage". Options have no leverage. Only a margin account makes options quasi leveraged: intraday 4x leverage, overnight 2x leverage, by simply allowing auto-borrowing funds from the brokerage firm. This is the standard margin acct. There are some other margin account types which might allow even more leverage, for example the so called "portfolio margin account". This is not possible in a cash acct (which is the topic here). Therefore: cash account does not provide any leverage, one can use only the own money. And I repeat: options don't have any leverage. Just study the P/L diagram of an option, for example here: https://optioncreator.com/ See also these postings regarding options trading in cash account (even daytrading is possible in cash account!): https://www.elitetrader.com/et/thre...y-to-cash-accounts.368400/page-5#post-5640814 https://www.elitetrader.com/et/thre...y-to-cash-accounts.368400/page-4#post-5635190