This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Options Forum: You Can Play With Five Grand

It's been a while, but the Options Forum is back! After a brief hiatus, in which I sought guidance from the big Specialist in the Sky, the Forum is now ready to resume answering questions, sharing knowledge (within our limits of understanding) and hopefully shedding light on how embracing options can provide a more fulfilling investment experience.

Aloha Steve,

I am very interested in options. However, at this time I have only $5K to invest in options. Is this amount acceptable for a beginner like myself? I would definitely apply for your free trial.

Thank you for your comments.
-- Edward

Aloha and shalom to you, too, Edward. Yes, you can start trading options with as little as $5,000. There are several brokers, from Scottrade to OptionsXpress (OXPS) to JimmyontheCorner (kidding about that last one) that have account minimums as low as $5,000. But be aware, opening an account with limited capital will come with restrictions, some imposed by the brokerage firm and standard margin rules. Other constraints will be of an emotional or mental nature.

A Man's Got to Know His Limitations

That said, restrictions might not be such a bad thing, especially for someone just starting out in options. It will force you to keep strategies simple and the risk limited, and require you to understand the parameters for each trade before initiating a position. For example, your trades will be limited to buying options that have a risk equal to the options purchase price, and you will not be able to short options, even as part of a spread transaction.

A positive byproduct of this restriction is that it should push you toward doing more research, and understanding the impact of transaction costs, both commissions and execution prices (paying the bid or selling on the offer can be the difference between a profit and loss). It also should lead you to consider taking a longer-term approach. All said, a limited bankroll should lead you to using trading strategies in line with your learning curve. And then when you have plenty of money, you can make all the mistakes you want.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%
TSLA $240.76 0.00%
YHOO $36.60 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs