Iron Condor - Help

BeDutch

Junior member
11 2
In a nomral trading account you need to show you are a competent trader and you need margin- some accounts need $100k. As I understand it with Robinhood as they are only buyers of calls, their losses are limited to their premiums paid. The effect of them buying calls en masse, however, is to ramp up a stock without needing to own the stock -and in a market that has all but outlawed a drop it's game on for these 'people' .
That is news to me! I do not have a Robinhood account. My account is with Think it Swim Canada. NOT as good as Think or Sim in the US but close. Never before heard about a brokerage where " they are only buyers if calls". I believe all brokerages make two way markets or facilitate market makers and retail clients to engage in two way markets. In North America there is no competency test, not even sure how that could be done, although if done correctly, I would applaud it. Why require people to take a driving test but permit them to do major financial damage to themselves and their dependents? In Canada the test for opening an account is much lower than 100K, but what you can trade is limited to how much risk the position entails. To say it cruelly, you can do everything to lose everything you have, as long as you pay commission and stay far enough away from risking the brokerage to lose money. So everybody can do a BUY WRITE COVERED CALL, but not everybody can do the risk equivalent naked put sale, sometimes not even when cash secured!
 
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Windlesham1

Well-known member
463 39
CBOE says:
All brokerage firms conducting a public options business must furnish its options customers with the options disclosure document entitledCharacteristics and Risks of Standardized Options. Firms are also obligated to establish suitability in approving a customer's account for options trading, and to ensure that all options recommendations made to customers are suitable in light of their investment objectives, financial situation and needs.
 

BeDutch

Junior member
11 2
Yes, so to open the account check the box to confirm that you have read the documents. Have you ever checked such box BEFORE falling asleep reading the fine print? Establishing suitability is in my experience not more than showing I have enough money to cover my losses. In the dozen or more accounts I have ( had), NOBODY ever asked me a substantive question or checked whether I knew when a call was an obligation and when it was a right.... . My comparison with the test required before one is allowed to drive, omitted to stress that driving tests are required in spite of all other drivers trying to compensate for your inexperienced mistakes, whereas option trading is the opposite if someone makes a mistake it takes sometimes not even a split second before your limit sell order which was meant to be a buy us filled. Ever experienced that? I HAVE ( morenthan once ) Now I check my blood sugar level before placing the order LOL OPTIONS RECOMMENDATIONS are a different sory altogether, and require all kinds of waivers and indemnification. But that is because there is ADVICE involved. Brokers as such go through great length to show the do not provide advice. Even several other services which are used and at times blindly copied go through great length to stress ( merely for their own legal protection) that their information is NOT advice but for " education " , " entertainment " or " illustrative " purposes ONLY
 
 
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