Mephistopheles Posted July 14, 2020 Share Posted July 14, 2020 Last week I bought some calls in my Roth IRA. The stock moved up and today I was able to sell covered calls for the same date at a strike a few bucks higher. It worked out well, I actually netted some cash from the trade. When I tried to sell the covered calls initially, the online portal didn't allow me to. I called in and was told that the system does not recognize the long calls thus it is interpreting my short call order as naked. But they understood what I was trying to do and put the trade in for me anyway by overriding the system. Now I noticed that suddenly, all of the cash I have in the account is no longer available to trade for. It is there but I cannot use it to make purchases. I called in to figure out what is going on. They were confused too and investigated. A few hours later I got a call back and was told that "bullish call spreads are not allowed in retirement accounts and whomever put in the trade should not have done so". They are telling me that a bull spread requires margin, even though it is covered by a long position. He gave me two options: 1. I can unwind the trade 2. I can move the short call to my taxable account since it is not settled yet, essentially making it a naked call The second choice makes absolutely zero sense because they are trying to reduce an apparent "risk" by going from covered to naked. And I didn't accept the first choice either because by this point I was so angry. I told him to go higher up to someone who can approve this trade as a courtesy, because if I am forced to unwind, I am moving my money out. He said he will get back to me. In the meantime, my significant cash balance in the Roth is still locked up, so I can't use it even if I wanted to until this is resolved. I've thought about it and realized that if they don't honor this trade I can get them to replicate in my taxable account. But that's bullshit because of the obvious significant tax implications. Any advice on what to do? It's such a significant amount of money involved, both in what is locked up or the tax implications if I move it, that I feel I should get a lawyer involved. Link to comment Share on other sites More sharing options...
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