The Unofficial Options Trading / Guide Thread

[alanbrenton]

I am hoping to start a thread where people can post/share valuable resources on options / option trading. Here are some that I have gathered from a few weeks back (from RFD, readings and online searches). Had I know about some of these, I probably wouldn't be losing out on an option trade I made but didn't close out at a decent profit when I had the chance to. I will update this first post for links that other RFD members will have provided. Feel free to share some of your option trading strategies as well though I've only been a call option buyer on my registered accounts since July, thankfully when stock volatility had plummeted to their yearly low (thus far).

The Options Industry Council:
http://www.optionseducation.org/

Historical Volatility spreadsheet from Peter...:
http://www.optiontradingtips.com/opt...omments_anchor

Option price history from BigCharts:
http://bigcharts.marketwatch.com/int...b=&time=&freq=
where symbol is HOV=RA for HOVRA for example (credit goes to http://answers.yahoo.com/question/in...1041333AAHfbu0)

Option pricing from Ivolatility:
http://www.ivolatility.com/calc/

Free Calculators, Volatility Data, etc. :
http://www.optionstrategist.com/free...sis/index.html

[alanbrenton]

Reserved for future posts.

[alanbrenton]

Besides books by Charles M Cottle, Jeff Augen and Lawrence G. McMillan, are there other noteworthy authors/authorities on option trading?

[mietief]

Anyone know if there is any brokerage that allows the writing of naked calls / puts for registered accounts (rrsp, tfsa, resp)?

[monty613]

Anyone know if there is any brokerage that allows the writing of naked calls / puts for registered accounts (rrsp, tfsa, resp)?

I don't think any broker will - essentially uncovered options are not qualified investments for registered plans...

http://www.cra-arc.gc.ca/E/pub/tp/it...tml#P214_33642

23. The writing of a naked call option, whereby a plan trust sells a call option in respect of an underlying property which it does not own, may result in the plan trust being considered to be carrying on a business. The same result may arise where a plan trust engages in a short sale, i.e., the plan trust sells property that it does not own. An RESP that is carrying on a business is revocable. An RRSP or a RRIF will be liable for income tax on its taxable income for any year in which it is carrying on a business.

[mietief]

I don't think any broker will - essentially uncovered options are not qualified investments for registered plans...

http://www.cra-arc.gc.ca/E/pub/tp/it...tml#P214_33642

Thanks for the info!

[Anonymouse]

What's the most lenient brokerage for granting a high level (3 or 4) of trading authorization? If I deposit $25k and claim to have experience, will Questrade or IB typically grant me this authorization?

I want to start off by writing puts.

[BTron]

What's the most lenient brokerage for granting a high level (3 or 4) of trading authorization? If I deposit $25k and claim to have experience, will Questrade or IB typically grant me this authorization?

I want to start off by writing puts.

With TD I had to answer three or four questions and got level 4 no problem. They were all pretty easy if you understand options. The ones I can remember are:

-A call is a contract to buy or sell a stock at a future date? (buy)
-The potential loss on a naked call is? (unlimited)
-What is the margin requirement on naked options? (30% of the underlying stock price + option premium - amount out of the money)

And to add to the original topic, 888options.com is great, position simulators, good quotes with all the greeks, etc.

[alanbrenton]

Which Canadian online brokerage allows for spreads or multi-leg option trades to be entered?

For US brokerages, is IB hands down the best in terms of ease of option order entry?

What's the most lenient brokerage for granting a high level (3 or 4) of trading authorization?

What exactly is level 3 or 4 trading authorization? My apologies but I've got option trading set up on my margin account but have so far only traded options in my registered accounts.

[BTron]

Which Canadian online brokerage allows for spreads or multi-leg option trades to be entered?

Definitely not TD, it's a giant pain in the ass. You have to call them up and they give you the online rate over the phone to enter a spread order...but why not just set it up online?

What exactly is level 3 or 4 trading authorization? My apologies but I've got option trading set up on my margin account but have so far only traded options in my registered accounts.

I believe level 1 only allows outright call/put purchases and covered calls, level 2 or 3 allows spreads and level 4 allows naked writing.