Can I trade options in my IRA?

Do brokerage firms allow option trades using IRA accounts?

Most brokers, including TD Ameritrade (thinkorswim), Fidelity, Ally Invest, Tastyworks, and Interactive Brokers, allow the trading of defined-risk options strategies such as put spreads in an IRA account based on “limited margin.” You may need to fill out a little additional paperwork such as this form from Fidelity.

The only trades prohibited in IRA accounts are: (1) shorting stock; and (2) selling naked calls. Selling naked puts must be cash secured, meaning that you need enough cash in your account to cover the full purchase price of 100 shares of stock if you get assigned.

For option spreads, the margin requirement is the same for both taxable accounts and IRA accounts: (spread width multiplied by 100) per contract. A five-point spread requires margin of $500 per contract (including the credit received for selling the spread).

Contact your broker directly for more information about trading options using your IRA.