Margin

Stock Talk

Vince

Vince

I put 20,000 into my account and sold 3 puts not realizing that I only have enough money for maybe one more trade. I did apply for a margin account. My question is how do I make 40 trades 500 a trade when they want to hold the whole amount of buying the 100 shares?

Ari Charney

Ari Charney

Hi Vince,

In general, we try to focus on stocks trading under $50 per share so that those selling cash-secured puts can do at least four trades per quarter. Depending on the price of the underlying stock and the time remaining until expiration, you may actually be able to do more than that on average.

Beyond that, it’s best for those who are new to this to start out slowly by only doing cash-secured trades for a while before using margin.

Ari

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