Series 7 - General Securities Representative Exam
Preview Mode
Bob used to be an options trader in his younger days at the CBOT trading floor. He is now 57 years old and wants to sell naked calls in his Traditional IRA. Which of the following is TRUE about options trading in a Traditional IRA?
Options trading is strictly prohibited in an IRA
A
IRAs are designed for margin trading
B
John can sell covered calls in an IRA, but cannot sell naked options
C
John can trade any kind of options strategy in his Traditional IRA
D
Explanations
Certain derivatives that contain unlimited risk are prohibited in IRAs. Other options strategies that are secured by stock, such as selling covered calls can be permitted. Unlimited risk exposure strategies such as selling naked calls is not allowed