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Pastimes : Ask Mohan about the Market

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To: vegetarian who wrote (15356)	4/8/1998 12:12:00 PM
From: IceShark	Read Replies (2) of 18056

types of trades allowed, margin allowed By law you cannot borrow in an IRA or pledge the account as collateral/security. If you were to do so the amount "borrowed" would be considered a prohibited transaction subject to penalty and tax. So, no brokerages will allow you to go out long on margin in an IRA, nor can you short stock - since you are borrowing the stock and using the account equity as collateral. I believe you would also have the same problem with writing (selling) puts and naked calls due to the reliance on collateral value, but I not totally sure of the legal status on this. Some brokerages throw additional restrictions on allowable transactions (like not letting you buy puts and calls) but these are internal policies, not legal restrictions. Regards, DWW

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