Multi-Leg Options
Executed Skillfully
Multi-leg option strategies provide clients with a cost-effective, time-saving, and versatile way to capitalize on their market views, whether bullish, bearish or neutral.
Why use Multi-leg options?
Multi-leg options provide many benefits:
- Time saving: Multi-leg options can save time in a fast-moving market. Instead of executing each leg of the options trade one at a time, traders can carry out a strategy with a single order and remove the time lag between each option entered manually. A slower trade using single-option orders can increase slippage as prices change between executions resulting in lower or higher than expected execution prices.
- Cost effective: Multi-leg options tend to be slightly less expensive than single-option orders because the proceeds the trader makes from selling options can offset some purchase costs. The flip side of this is that there will be slightly higher commission costs with multi-leg strategies, and profit ranges may be more limited than single-leg options.
- Versatility: Multi-leg options allow traders more versatility in their trading by offering more tools in the toolbox to take advantage of bull, bear, and neutral markets. Traders can tweak strategies to limit or increase risk as well as maximum and minimum profits, allowing a wider range of trades that can be tailored to more scenarios. Multi-leg options involve risk and are not suitable for all traders. Transaction costs may be significant in multi-leg options strategies, and advanced options strategies often involve greater and more complex risk than single-leg options. Losses with multi-leg options can be greater than the initial investment. Evaluate the benefits and drawbacks carefully.
To learn more about multi-leg options strategies
MULTI-LEG OPTIONS
With multi-leg options, you can simultaneously buy and sell options, offering more opportunities to customize your strategy.
A Broker Built For Multi-Leg Options
The ease of executing multi-leg options strategies depends on the broker’s configuration. Executing multi-leg options as one order allows a trader to avoid troubles of entering into a position without the worry of not getting executed on one of the legs. Lime Trader is designed to make multi-leg options trading more accessible. The platform executes simultaneously to reduce execution risk. Here are the features that set Lime Trader apart from the competition:
Strategy templates
Lime Trader’s Strategy Templates help you easily load the most common multi-leg options strategies. The ticket allows you to customize the strategy to your goals, including the ability to add or remove legs of the trade. Multi-leg options strategies are shown with quotes for each leg, and an overall estimated strategy quote.
Gain/Loss Calculator
As you adjust your strategy, the line chart updates with streaming data to show the max gain, loss and breakeven points.
This can help you understand the risk/reward available and adjust your strategy accordingly.
Position Views
The Position Views feature allows you to monitor data at the strategy, underlying group or individual contract level. Data includes the Greeks, margin requirements, P&L, and more. This feature lets you review your overall exposure and helps you make the adjustments you want..
Position Management
The Position Management feature simplifies your trading workflow. Checkboxes can guide your position selection. You can smoothly open new positions, roll them out, and exit them all while increasing or decreasing your allocation to the multi-leg options strategy.
F.A.Q.
What is the charge to trade options?
The online cost to trade options is $0.50 per contract.
Do I need to update my account in order to trade options?
Yes, you will need to update your account with an options agreement. Please submit the Option Account Agreement via document upload or scan and email it to [email protected].
How do I exercise my options?
To exercise an option, please submit a request from your email address on file to [email protected]. The email must include your account number, name, number of contracts to be exercised, and the option symbol to be exercised. Funds to cover the cost of exercise must be in the account prior to submitting the request, or the request will be rejected due to insufficient funds
When can I exercise my options?
Requests to exercise options can be submitted at any point before 3:00 PM EST on the last trading day prior to the date of expiration. Please note that for a request to be processed the same day, it must be received via email prior to 3:00 PM EST. Please submit the request to [email protected].
Where can I see that my options are exercised?
You can view your exercised options on your monthly statement and on your Lime Trader account. To view your statements online, click on the “Reports” button located inside of the Cabinet. To view the exercise transaction, select a two-day time range after the day that you submitted the assigned request.
How much does it cost when I exercise my options?
There is a $20 fee per exercise or assignment. This fee is charged on a per option symbol basis.
When are my options assigned?
Given the option contract, options held short can be assigned at any time. Options are generally automatically exercised or assigned if in the money at expiration, but may not always be assigned. Long option holders can request to not exercise contracts.
How much does it cost when my options are assigned?
There is a $20 fee per exercise or assignment. This fee is charged on a per option symbol basis.
Where can I see that my options are assigned?
You can view whether your options are assigned on your monthly statement and on your Lime Trader account. To view your statements online, click on the “Reports” button located inside of the client portal My Account. To view the assigned transaction, select a two-day time range after the day that you submitted the assigned request.
Which option orders can I make? What is the maximum risk level allowed?
Lime Trading offers clients with cash and IRA accounts the ability to purchase calls and puts and write covered calls (if approved). Qualified margin accounts have the ability to write uncovered calls and puts (if approved). Qualified margin accounts must have a minimum of $25,000 in equity to write uncovered puts and a minimum of $100,000 in equity to write uncovered calls. Complex option strategies, including spreads and straddles, will be added in the coming months.
Are options margin eligible at Lime Trading?
No, options cannot be borrowed against at Lime Trading.
Do you allow cash-covered puts?
At this time, cash-covered puts are not available.
Does Lime Trading offer streaming option quotes?
Yes, streaming option quotes are available on the Lime Trader platform.
Does Lime Trading provide option charting or historical option pricing information?
Yes, these are available in the Lime Trading platform.
Am I able to trade options in an IRA?
IRA accounts are eligible to be authorized for Options Level 1 and 2, allowing you to purchase calls and puts and write covered call options. Uncovered option trading is not permitted for IRA accounts. In order to update your account for options trading, please submit the Option Account Agreement via document upload or scan and email it to [email protected].