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Old 25-02-2020, 11:40 AM   #7
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Join Date: Jun 2010
Posts: 13,003
I think Interactive Brokers is going to be tough to beat, but you might wish to investigate Firstrade and Lightspeed as possible alternatives for options trading. Both Firstrade and Lightspeed accept account applications from non-U.S. residents last I checked. Firstrade is OK with residents of Singapore, but I'm not sure about Lightspeed.

A common problem that most brokers not named Interactive Brokers share is that they don't provide any low cost way to move Singapore dollars to the broker and convert them into U.S. dollars. And vice versa. Be sure to factor those considerations into your decision.

I should also point out that options trading comes with some special peril if the broker becomes insolvent. Insolvency is possible no matter where the broker is domiciled, but the U.S. specifically is a well regulated market with SIPC protection (U.S. federal government backstopped insurance). There's no analog to SIPC coverage in Singapore, so it's great that it exists -- it's an advantage with U.S. domiciled brokers. However, SIPC coverage is unavoidably limited when it comes to options. When a broker collapses all your options just run to their expirations. If that works out OK, great, but it might not. The SIPC then steps in to defend your "closed book" valuation, up to SIPC limits unconditionally, and it tries mighty hard to recover beyond limits.

When MF Global collapsed, everyone recovered fully to fair market value, but some options and futures traders were upset because all their open interest positions ran to expiration. It didn't matter what their options trading intentions were pre-collapse. The collapse occurred, and the default outcome ruled. But this too is part of the unavoidable risk you take. But hey, you're gambling already, so what's a little more gambling?

Also bear in mind that cash, in any currencies, held at a U.S. broker forms part of your U.S. taxable estate when you die. To my knowledge options themselves are not U.S. estate taxable except for U.S. persons.

Last edited by BBCWatcher; 25-02-2020 at 11:45 AM..
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