DELL Message Board - Msg: 15639474

To: nolimitz who wrote (164658)	4/9/2001 11:32:35 PM
From: IceShark	Read Replies (2) of 176342

You can buy options in an IRA, but some brokers won't let you do it due to house rules. Selling them can't be done unless you are indirectly doing it because a fund you own does it. The hang up is that you cannot pledge an IRA's assets or they are deemed a premature distribution. So, if you used your IRA as collateral to buy a car, the car loan would be a pre-mature distribution at the time of pledge even if you paid off the loan completely and the bank never received a dime from the IRA. Carry it a step forward and you see why margin is not allowed because you are pledging the IRA assets to cover the margin shares (loan) you bought. Next step to SELLING options, you are pledging account assets to cover losses if the option contract goes against you. If you do buy put options there is a nasty trap you can fall into. If they are in the money, you better sell them before expiry because the broker will put them on Monday if they are ITM by about 1/4 point and you will now be short the shares and screwed for a premature distribution.