Options trading with TDAmeritrade?
Hello community
My current broker (AMTD) has 4 levels of option trading opportunities, I will focus on the first two:
Level I (Covered):
Covered call writing
Cash-secured put writing
Level II (Long)
Covered call writing
Cash-secured put writing
Purchase of calls and puts
I, basically, wanted to simply trade option contracts, so I have applied for the access to the second level. Unfortunately, I was approved for level 1 only. I do not quite understand the conditions of this level. I have also got a response from helpdesk:
“Your account is set up to allow covered call positions and cash-secured put positions. With a covered call, you can write a Call option if you hold the underlying stock. A cash-secured put is when you write a Put option if you hold enough funds in the account to cover the option if it is assigned to you. You can write an option online if you go to Trade, then Options. The type of order will be Sell to Open.”
Does this mean that I cannot buy any option contracts but only to create them? For example I can create a call, with the stock in my portfolio, and vice versa with the put – and THAT’S IT? I was really looking forward to buying and selling contracts, not creating them, and if that is something I cannot do for now, well that just sucks.
I am not quite ready yet to trade options, but I would really like to have a decent and simple explanation of this Level1 trading opportunities.
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