The toll free line that most US brokers advertise is free only for within the US but as trading US options become of greater interest here in Australia then I am sure a local facility will be established. Many brokers have an “on-line” chat facility, which generally extend outside their trading hours and this allows you to discuss trading strategies. They are careful however not to get involved in actually providing investment advice.
Knowing the experience of the person you are chatting with is important as over the last several months there has also been a resurgence in options trading and consequently there are individuals who have had limited experience.
Choosing your broker is the most critical aspects of getting started. Where to start? Optionetics web site - http://www.optionetics.com/broker/featured/profiles.asp - lists over 30 brokers and is a great place to start.
What should you look for in a US broker? Apart from the obvious questions such as how long have they been operating and what is the depth of experience of their dealers, there are other issues especially in regard to their web site as in this era you cannot avoid using a website if you want to trade options.
How good is their web site and is it easy to access and to use? There is a wide range in the quality of web sites and it is worthwhile to spend a few hours looking at sites as it will be time well invested. The Optionetics site provides a very informative rating of brokers on an incisive range of criteria but also provides a rating table of brokers against such criteria as site design, user friendly level, brokerage cost etc., The same site also has many FAQs on issues relevant to dealing on-line.
One aspect that was important to me when I first started out was to have a safety net to guard against erroneous and expensive mistakes? This will ensure that you can’t wipe out your account by spending more than you have in your account. But you still need to be very careful when entering trades that have more than one leg as it is a little more involved than buying shares on-line in a market where you are familiar with the share, price etc.,
Most sites have useful educational facilities and many also allow you to paper trade by merely registering.
Reporting is important to me. I want to be able to review my option holdings from many different perspectives. In particular I want to be able to see each leg within my spread and watch how each leg is tracking against expectations.
Most brokers allow you to download application forms which you have to complete in hard copy and mail to them to open an account. Allow at least two weeks for this process. The number of forms will vary according to your status but will generally be at least a couple – but do not be deterred they are not too complicated. Once an account has been opened you then need to remit funds to get started and about one week should be allowed to do this. You will remit Australian dollars which are of course converted to US dollars. You thus have an exchange rate exposure and it is a personal decision as to whether you cover forward that risk.
You are now ready to start trading! Generally you can find numerous trades for less than $500 so my suggestion is to start off slowly and once you have perfected your strategy you can increase the size of your stakes. My suggestion would be to start off with one strategy, understand the post purchase machinations of those legs and then advance to the next strategy. Remember you do not have to conquer all in the first month – one step at a time!
Enjoy the ride.