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Trade options on margin

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trade options on margin

Founded in by brothers Tom and David Gardner, Trade Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. Here's a quick rundown of what they are and what they do. Cash account This type of account asks you to deposit cash, and then you can use that cash to buy stocks, bonds, mutual funds, or other investments. It's not much more complicated than that. Margin account In a margin account, the cash and securities in your account act as collateral for a line of credit that you take out from the brokerage in order to buy more stock. The interest rates that brokers charge are lower than typical credit card rates, but they do mean you'll need to earn a much higher return on your investments options you would margin you were only investing with your own cash. We generally counsel against using margin, but that doesn't mean margin getting a margin account is automatically a bad idea. Option account This type of account allows you to trade options, which is a much riskier business than stocks. In general, we believe most investors don't need to trade options, although again, having an account that allows you to trade options isn't automatically bad. We don't counsel against this one! Check out our handy second guide for tips on options and why to open a basic IRA. Or if you want all the nitty-gritty details on the different kinds of IRAs, see our four-step guide. Skip to main content The Motley Fool Fool. Premium Advice Help Fool Answers Contact Us Login. Latest Stock Picks Stocks Premium Services. Stock Advisor Flagship service. Rule Breakers High-growth stocks. Income Investor Dividend stocks. Hidden Gems Small-cap stocks. Inside Value Undervalued stocks. Learn How to Invest. Credit Cards Best Credit Cards of Best Credit Card Sign-Up Bonuses Best Balance-Transfer Credit Cards Best Travel Credit Cards Best Cash-Back Credit Cards Best No-Annual-Fee Credit Cards Best Small Business Credit Cards. Mortgages Compare Mortgage Rates Get Options How Much House Can I Afford? Taxes How to Reduce Your Taxes Deductions Even Pros Overlook Audit-Proof Your Tax Return What Info Should I Keep? Helping trade World Invest — Better. How to Invest Learn How to Invest. Personal Finance Credit Cards Best Credit Cards of Best Credit Card Sign-Up Bonuses Trade Balance-Transfer Credit Cards Best Travel Credit Cards Best Cash-Back Credit Cards Best No-Annual-Fee Credit Cards Best Small Business Credit Cards. Margin to Invest in Stocks. Prev 1 2 3 4 Next.

Short Selling on Margin

Short Selling on Margin trade options on margin

5 thoughts on “Trade options on margin”

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