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What does it mean to be a Cash Trader?
- Thread starter sledged
- Start date
I'm not 100% sure in other markets, but in the stock market, it means you trade with YOUR money and no margins/borrowed funds.
Of course, you have to have a margin account to do options, but you only trade to the limit of the cash you have in the account, and can always cover with your own money.
Of course, you have to have a margin account to do options, but you only trade to the limit of the cash you have in the account, and can always cover with your own money.
it's a term meant to differentiate between derivatives and the actual market. let's say the s&p 500 future is the derivative, and the actual 500 stocks are the "cash"
Hels02 said..
Of course, you have to have a margin account to do options,
Just so no one is misled here, this is broker determined. Many brokers allow option trading in IRA's. The only transactions forbidden in IRA's by some brokers are overnight short positions whether cash or derivatives, although i think most prohibit even intraday short positions. The reasoning is any position with undefined risk is not permitted in an IRA. One can not hold naked short calls, for example, in an IRA. But why would you want to? There are legal ways to short in an IRA however. Puts for example, are allowed because they have defined risk. Also one can buy an inverse etf like PSQ which shorts the NASDAQ 100, and there are many other possibilities.
Of course, you have to have a margin account to do options,
Just so no one is misled here, this is broker determined. Many brokers allow option trading in IRA's. The only transactions forbidden in IRA's by some brokers are overnight short positions whether cash or derivatives, although i think most prohibit even intraday short positions. The reasoning is any position with undefined risk is not permitted in an IRA. One can not hold naked short calls, for example, in an IRA. But why would you want to? There are legal ways to short in an IRA however. Puts for example, are allowed because they have defined risk. Also one can buy an inverse etf like PSQ which shorts the NASDAQ 100, and there are many other possibilities.