Using Options to Trade Stock

Listen to Advisors Option 73: Using Options to Trade Stock

Options 101: Replicating Equity Exposure using Options

The Buzz: What do informed financial advisors need to know?

  • FINRA Proposes Higher Position Limits for ETF Options Contracts
  • Nine ETF index options contracts have been selected for a doubling of position limits if SEC approves FINRA’s proposal.

Office Hours: Listener questions and comments

  • Question from Charles Vera – Greetings AO crew (Mark, Chris, Matt, Eric and new entrant John). Love the show and have been listening for over a year and have caught up on most of the back catalog. I have two questions – one options related and one somewhat off topic but I just wanted to pick your brains.
    1.) How much capital should I plan to set aside when selling puts for my clients? I’m looking at selling 5-10% OTM spy puts on a monthly or tri-monthly basis? But it seems like the margin requirements for this strategy are all over the place. Do they just vary by broker or is there some rule of thumb I should consider when tying up capital to sell puts?
    2.) Do you think the recent market volatility will cause the Fed to reconsider its roadmap for raising rates in the near future? There aren’t too many other developed economies that are putting the brakes on like the U.S. right now. Thanks again. Really appreciate all that you guys do.
  • Question from Steve Giannakopoulos – Seems right that you can write 1 put option when you already own 100 shares of the underlying stock. Brokerage can lock and keep the 100 shares as collateral instead of holding cash as collateral. It doesn’t happen though. Why? You could have your long 100 shares forced sell at the put option strike price if it’s ITM and you get assigned. I read what you said, I just don’t understand it. Thank you though.
  • Question from SX78 – Now Trump is weighing in on this earnings call thing. Does this suddenly have legs? What will this mean for volatility going forward?
  • Question from Liznder – If you had to start over with learning about and trading options what would you do differently?