Choices trading can be complicated even more so than stock trading. When you purchase a stock, you simply choose the number of shares you desire, and your broker fills the order at the prevailing market rate or a limitation cost you set. Trading alternatives needs an understanding of innovative strategies, and the procedure for opening a choices trading account includes a couple of more steps than opening a normal investment account.
( Required to review puts, calls, strike rates and other options trading terminology? See our post on options trading 101). Compared to opening a brokerage represent stock trading, opening a choices trading account needs bigger amounts of capital. And, given the complexity of forecasting several moving parts, brokers need to know a bit more about a potential financier before awarding them a permission slip to begin trading choices.