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Ask the Institute

DATE: October 1, 2001

QUESTION:
Can I sell calls on stocks in my IRA?

ANSWER:
The answer is "it depends on your broker", but there is more to it than that. IRA's are covered by the rules of a law commonly known as ERISA. This law basically says that since this a retirement account, not every strategy will be allowed. You may never create a margin loan in an IRA. You can buy stocks. With options you can possibly do a covered call, buy a protective put, sell a cash secured put, buy a cash secured LEAPS call or a few other strategies. Talk to your broker to see what they allow.


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