Since IRA's can't borrow, they'd best only do that if you have enough cash in the account to buy the stock. Ditto exercising calls.
Never having done this, I dunno what the really do. If anyone really cares, it should be easy enough to call a few brokers and ask.
R's, John
The owner of an IRA can't borrow from the IRA. But I am aware of no rule that prohibits the IRA from borrowing. IRAs are not supposed to buy anything on margin, because it can't meet margin calls.
It's uncovered calls that are the problem, not covered calls.
As an example, here's what Fidelity will allow options-wise in an IRA. This is not speculative -- it is what I've personally been approved for options-wise in my IRAs (I don't actually trade options in them, but I wanted to have the flexibility in case I ever wanted to). This is the "highest" Fidelity-allowed use of options in an IRA:
Purchase of Calls/Puts (equity and index) Purchase of Straddles/Combinations (equity and index)
-- Rich Carreiro snipped-for-privacy@rlcarr.com
I asked my Massachusetts-HQ'd mega-brokerage advisor about this. He said they dont offer them yet because the reimbursement-checking is expensive for relatively small accounts.
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