Options Trading Tutorial

Which broker allows leveraged options trading?

Does anyone know which online broker allows leveraged options trading? Thanks

Public Comments

1. I am assuming you are talking about brokerages in the United States. I am not sure what you mean by "leveraged options trading." If you mean trading options positions that create a leveraged position in the underlying security, essentially all brokers allow it in accounts that have been approved to trade options. (To get an account approved to trade options you have to meet certain requirements that vary between brokerages.) Most brokerages have different authorization levels for options trading. The level on your account determines which types of options trades are allowed. If you mean allowing margin on long option positions, the SEC strictly limits the maximum a brokerage can allow in most accounts. The brokerage cannot allow any margin for an option expiring in nine months or less. If you own an options that has more than nine months until expiry the SEC will allow a brokerage to use a small amount of margin from the option, but the SEC never requires a brokerage to grant margin. I do not know which brokerages grant margin on long term options. The best way to get around the SEC "Regulation T" margin requirements is to ger a "risk based" margin account instead of a "rule based" margin account. For risk based margin systems, exchanges consider the maximum one day risk on all the positions in a complete portfolio, or subportfolio together (for example, a future and all the options delivering that future). If you know what you are doing, a risk based margin account will allow you to use more leverage. The only brokerage that I am certain offers risk based margin accounts is Interactive Brokers, but I assume a lot of others offer them as well. Just remember that more leverage you use the more likely you are are to be wiped out.