3 ms·
You are not permitted to use retirement funds for any margin trading, including short-selling. That is why you cannot short from your account: https://www.irs
by TAForObvReasons 8y ago
You are not permitted to use retirement funds for any margin trading, including short-selling. That is why you cannot short from your account:
https://www.irs.gov/publications/p590b https://www.irs.gov/publications/p590b
> Generally, a prohibited transaction is any improper use of your traditional IRA account or annuity by you, your beneficiary, or any disqualified person.
> The following are some examples of prohibited transactions with a traditional IRA.
> - Using it as security for a loan.
If your IRA let you sell calls, you likely own the underlying equity.
Surprising how many people aren't familiar with the rules and just downvote
- mikestew 8y agoYou are not permitted to use retirement funds for any margin trading, including short-selling. Ah, of course, borrowing the shares and all. Hadn't given it a lot of thought, frankly; short trading stays away from the IRA. If your IRA let you sell calls, you likely own the underlying equity. For sure, trying to get rid of the underlying stock that I didn't want anymore. I'd be shocked if one were allowed to use their IRA to trade, say, naked puts. But without looking to see if I've done it, I'll assume one can buy puts (with a trade for the underlying stock) because I buy calls all the time using the IRA.
- encoderer 8y agoYou don’t need to own the underlying, you just need to define your risk by, for example, buying a far out of the money call. You would need to have funds to cover the buying power tied up but many options plays like this would be done over a short period so it can be viable.
- deleted 8y ago[deleted]