Answers
and also, is it possible to exercise your call options and buy the stocks on margin and sell it on the same day?
i.e. exercise call options on Scottrade purchase NetSuite stocks on margin and sell them on the same day?
<<<How do you exercise option using online broker such as Scottrade or ShareBuilder?>>>
Some online brokers allow you to exercise an option online, others require that you call the brokerage to exercsie an option.
If the brokerage allows you to exercise options online, there will be a screen where you specify the symbol for the option and the number of contracts you want to exercise.Otherwise you have to call the brokerage when you want to exercise options.
<<<is it possible to exercise your call options and buy the stocks on margin and sell it on the same day?>>>
Yes. You probably will get charged a couple of dollars of margin interest. You should have enough margin available to cover the purchase, or the brokerage may refuse to exercise the options.
Video training series to help first-time option traders understand the basic concepts behind trading options online.
I'm student and i want to start trade option and i need to know which online broker offers no minimum start up fund meaning 100% of the fund will be used for the underlying securities.
I realize that OptionXpress do not have minimum start up requirement but they need margin account of minimum of $2000 for buying naked put.
Anyone who know about these please do come forward and explain, thank you.
How can you buy and sell options without money? You could paper trade without money. Once you have an account number. I think you would not have to fund your account for that. I paper traded for about a year with $200,000 play money. Aft3er one year I had $400,000. So I borrowed $65,000 on an interest free credit card for a year. In one year, I lost it all. The 'trader effect'. There is a lot to learn. It would have been best if I had started paper trading with a realistic amount, I think. OptionsExpress has a nice learning program. Good luck.
Here is my question: let's say I buy $1,000 worth of call options. Before expiration, the stock price raises well above the strike price. I now want to take advantage of the gain and exercize the option. I want to buy at the strike and immediately sell it. The problem is, I don't exactly have enough funds to do that. Is it common for brokers to lend you the money just for a split second? They should see that you will give it right back to them in a second, it could even be automated. I asked Scottrade about this though and they said they didn't do this. So my question is, are there any brokers who do? How common is it? It seems like something they all should offer.
(1) There is no need to exercise your options to realize your profits. You can simply sell the call options without ever exercising them.
(2) Assuming they are American style options, which they will be if they are traded on an American exchange and the underlying is a stock, you could exercise some one day, sell the stock the next day and exercise more the next day, reducing the amount you need to have in your account. However, I do not recommend this approach.
I do not know of any brokerages that would allow you to exceed your margin limit to exercise calls since there is no need to do so.
No funds to cover the exercise, what happens?
(1) Your broker will never automatically exercise an option. If an option is in the money by at least one cent at expiration the Option Clearing Corporation (OCC) will exercise it on your behalf unless you have given explicit instructions not to exercise it.
(2) The odds that you could not sell an in the money option are very low, so the situation you are describing would be unlikely, but possible.
(3) Most brokers allow long option positions in either a cash or a margin account. If it is a cash account you are supposed to deposit the funds to pay for the stock within three day. You should contact your broker before the market opens on Monday to explain the situation and ask what you need to do. The broker will probably have you sell on the open Monday morning. If it is a margin account the broker will lend you the money to buy the stock.
(4) The important thing to remember is that you never have to be in this situation. If you tell your broker you do not want the options exercised automatically the broker will inform the OCC and they will be allowed to expire worthless. I believe different brokerages have different deadlines for the latest time you can inform the brokerage not to exercise the option, but I do not think any of them have set the deadline before 4:30 Eastern time. So, even if the stock suddenly moves into the money just before the market closes at 4:00 Eastern time, you still have time to notify your broker you do not want the options to be automatically exercised.
I'm from Malaysia and previously wanted to try Scottrade and Tradeking but the service is not extended to M'sia :(
Appreciate also if you have any other suggestion for me to trade with these broker houses
Do share with me as well if you have any experience of option trading from Malaysia :)
Don't know what's available in Malaysia, but most options traders I know use
http://individuals.interactivebrokers.co m/en/main.php
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News
Ameritrade CFO:Co Averaging 406000 Trades A Day In OctWall Street Journal - Oct 27, 2009
Earlier this year, TD Ameritrade completed its acquisition of options broker thinkorswim Group. Tomczyk said TD Ameritrade would pursue acquisitions in the and more »Buffalo News - Nov 01, 2009
On an option ARM, WaMu would reward brokers as much as 3 percent of the loan amount — more than triple the standard commission at the time.Reuters - Oct 30, 2009
The VIX often moves inversely to the underlying S&P 500 index as option premiums are raised. "Investors are concerned about the outlook for the final two and more »msnbc.com - Oct 30, 2009
Wonder if a guy could broker a 3-way between them and another worn-out has-been from, say, Alaska? It takes no genius to see that they shouldn't trust him, and more »The Hill - Oct 29, 2009
Baron Hill (D-Ind.), a Blue Dog leader who helped broker the “negotiated rates” compromise in July in the House Energy and Commerce Committee. and more »