Posted by Phù Vân (136..98.176) on May 04, 2022 at 09:46:56:
What is limited margin?
Trading on margin enables you to borrow against the value of securities you own in your brokerage account and use those funds to buy additional securities. Margin accounts also enable you to sell securities short, execute complex options strategies, and access a line of credit.
If you are looking to trade on margin within a brokerage IRA, you will not be able to access the full range of margin trading features noted above. However, IRAs do offer what’s known as "limited margin."
Limited margin means you can use unsettled cash proceeds in your IRA to trade stocks and options actively without worrying about cash account trading restrictions or potential good faith violations. Unlike a nonretirement account that has full margin trading privileges, limited margin doesn’t allow you to borrow against the value of existing holdings to create cash or margin debits, sell securities short, or establish naked options positions.
Limited margin is available for most types of IRAs, including traditional IRAs, rollover IRAs, Roth IRAs, SEP IRAs, and SIMPLE IRAs. In order to qualify for limited margin, you must meet eligibility requirements, and read and agree to a limited margin account supplement.