Understanding Cash, Margin and IRA Accounts
Jun 30, 2023
In the world of complex financial structures and features, traders should grasp the fundamental differences between the types of brokerage accounts, so that they can choose the one that fits their needs. They should also know about some of the commonly overlooked "extras."
If you scroll through the tastytrade website, you will find a lot of different "types" of brokerage accounts, but fundamentally there are two distinct kinds: cash and margin.
The key differences are:
We will quickly see how trades are financed and how much buying power is required with a short option leg in the position.
When picking an account, the key question to keep in mind is whether you want financing capabilities from your broker to be able to trade anything with efficient capital use, or do you want to self-fund your portfolio fully with no brokerage financing options? That way, it becomes easy, and you can focus on trading what you want! Watch me explain it further with the CEO of tastytrade himself, here.
Anton Kulikov has a decade of trading experience. He leads research content creation at tastylive and appears on more than 20 live shows, including Futures Power Hour, Options Jive and Research Specials LIVE. He co-authored the bestselling investment strategy book Unlucky Investor’s Guide to Options Trading and contributes research content to Luckbox magazine.
Trade with a better broker, open a tastytrade account today. tastylive, Inc. and tastytrade, Inc. are separate but affiliated companies.
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Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.
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