Hi, is it possible to do options trading (long only, ie. no shorting/selling) with a cash-only account? I mean, can one do options trading, as said long only, only with a margin account? Anybody know how the brokers handle this case? What about reusing the funds, is there any wait time? BTW, I do have a margin account at IB, but just wandered about cash account as my strategy does need only long positions.
Yes. You can trade option with a cash account, and better yet you can avoid pattern day trader rule (>4 trades/week, margin account) as long as you have available fund in your account during the day (NO free riding with unsettled fund). Fund is clear next day (option) rather than 3 days (stock), meaning that you can re-use your fund again the following day. For Tradestation, if you sign up for level 2 option trading, you can simply buy CALL or PUT without touching any related stock. There are 4-5 different levels of option trading permissions, and different brokers may have different systems and requirements.
So, the settlement time with cash account for options trading is T+1. Does in this situation (long only options trading) a margin account have an advantage over a cash account? Is there maybe T+0, ie. immediately reusing possible? Update: I think I have study the "Day Trading Buying Power" stuff with margin account...