How should I set up my brokerage account?
Consult with your brokerage firm for specific requirements of account set-up.
To write covered calls, you will need request approval to sell covered options
and you will usually need to establish a margin account.
Use of the margin portion of your brokerage account is optional. Margin
finances a portion (usually half) of a stock trade. Using margin can provide
higher net returns if your percentage return is higher than the interest paid
for using the margin. Margin usage does carry risks, however, and is not
recommended until you are very familiar with the risks it involves.
Please see The
Characteristics and Risks of Standardized Options for more information.
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