Trading Options and Share Trading 'How To' Guide/FAQ

·         What requirements do I need to buy options?

·         What happens if my option finishes "in the money" at expiry?

·         What happens if I get assigned on my written application?

·         Can I sell stock which is lodged at ACH and being used as collateral?

·         Can I sell stock which is lodged at ACH but which is not being used as collateral?

·         What type of option strategies can I do?

·         Can I write calls and puts without lodged collateral?

·         If I sold some shares today, can I use the proceeds to trade options?

What requirements do I need to buy options?

You must open an equity account, be broker sponsored, and have a Macquarie or Adelaide Bank CMT account linked. You must also complete the required Berndale Derivatives Agreement in order to open an options account.

What happens if my option finishes "in the money" at expiry?

All options contracts are exercised automatically if in the money and you will be required to pay for the stock by T+2 or deliver the stock to cover by T+2.

What happens if I get assigned on my written application?

Same as above. All options contracts are exercised automatically and you will be required to pay for the stock by T+2 or deliver the stock to cover by T+2.

Can I sell stock which is lodged at ACH and being used as collateral?

It is not possible to enter a sell order for stock which is being used as collateral for an options position. You will need to either lodge additional stock or cash before requesting withdrawal of the relevant stock.

Can I sell stock which is lodged at ACH but which is not being used as collateral?

Yes. If you wish to sell stock which is lodged with ACH but is not being used as collateral to cover an option position, you will need to send an email to options@thinkminc.com.au requesting the stock be withdrawn prior to any sell order being accepted by the system. Once the stock has been withdrawn, you may then place an order to sell the stock.

What type of option strategies can I do?

Minc allows clients to buy call and put options as an opening trade as well as allowing the writing of call options against stock specific collateral by way of a covered-call or buy-write strategy. Clients can sell calls and puts or buy back written calls to close out positions.

Can I write calls and puts without lodged collateral?

You cannot write a call option without lodged collateral. Put options cannot be written under any circumstances.

If I sold some shares today, can I use the proceeds to trade options?

Not immediately. Sales of shares are settled after T+3 days while options are settled after T+1 days, where T represents the day of the transaction. Therefore there is a two day lag before you can use these proceeds to trade options.