RRSP are like US IRAs, RRSPs allow no margin, and no US options. only CDN call options OK, but buying and covered writing only. as for Cdn options, have you ever seen negative time value? check out the offerings. what a joke. i remember putting in an order to buy some calls. i split the spread and without the underlying changing, the offer moved higher on my bid. its a very illiquid mkt, and very suspect. those traders in Montreal are going to put themselves out of business soon with their antics
I didn't know you cannot have US options in Canadian RRSP ! Also, it is ridiculous that you cannot buy puts as insurance for your long stock positions !!! As for Canuck option market, you're right, it sucks! Cheers!!
over_invested Can you explain a bit more about being able to trade more than 20% in foreign content. If I understand you correctly I can trade 100% of the funds in foreign stocks for example, as long as I am not over the 30% at month end or whenever the company does its calculations. For someone like me who swing trades US stocks this would be ideal as I could guarantee that I would be flat around the time this calculation was done. Echo
I am almost certain that you are still able to have US options (calls) or do buy-writes with US stocks in an RRSP, as long as you dont exceed the foreign content rules. I have been checking the web but can't seem to see it anywhere. Will have to check my financial planning books. Another thing to watch is if you were to purchase a Canadian Company such as PDG, NT on the NYSE it may be counted as foreign content. Purchase on TSX and it is Canadian content. Another thing that could happen is if a Canadian Corporation changes and Incorporates in the US it wolud then be considered foreign content and put you over the limit. This one did happen to me.
first, you need to confirm with your brokerage's RSP dept. when the fee is calculated. it almost certainly will be month end. the once a month calc is to simplify the admin of the 1%/month rule. next, the 20% foreign rule was raised to 30% several years ago (scaled in over 2 year period). as i've written before, it can be increased up to 50% when you add certain types of property, like labour-sponsored investment funds. the 30-50% figures are the amounts which there are no penalties. they are not maximums. the %s are based on cost value, not market. and yes, you understand correctly, you can swing trade US stks to your hearts content. i do it all the time, in fact, i even pay the penalty sometimes. hey, it's only 1%, and lately i'm doing much better than that.
you will have difficulty finding that rule, but all you have to do is call your brokerage for confirm. not true. NT,PDG in the US is exactly the same as NT,PDG in Cda. many TSX stks are listed on NYSE too, when buying in an RSP you must convert to US$ but settle in Cdn$. in the conversion you will lose on the FX spread. typically this happens when a US co. buys a Cdn co. the cdn shareholder has the option to chose to hold shares of an Exchangco. there are about 30 of these on the TSX right now, and are set up to address the foreign content issues. examples are :JDU, DX, SCT, HCX, AVZ, NMC (all TSX listed)
Just another thing I've learned: as Over Invested said, the 30% is based on cost value, therefore if you're a long term investor and want to keep a losing long position of a foreign stock, you could sell it and buy it back (don't know if there are any rules regarding time), that way your cost value decrease, as well as your % foreign. Over Invested, I know that the penalty is 1%, but would you know 1% of what? the amount over 30% ? Cheers!!
So every time you open/close a US position pay the high (at Etrade Canada I was quoted almost 2%, worse than bank already high bank spreads ...) USD-CAD spread? As by the rules RRSP account cannot be kept in USD. %2+2%+1%=5% those seem to be some nicely working swing trades