Profit potential from any market direction with integrated Options trading

Exchange Traded Options (Options) are a versatile and flexible tool. They can be used to compliment or refine your existing share strategies, or take advantage of opportunities in other ways to owning direct shares.

A CommSec Options Account allows you to trade Options just as easily as you trade shares. It’s designed to be used with your other CommSec accounts, including a CommSec Margin Loan, to create a range of investment strategies across your portfolio, from the simple to the sophisticated. Whether you’re looking simply to protect the value of your existing portfolio or generate income or want to implement more advanced Options strategies, your CommSec Options Account can help you make the most of your investments.

How it works

About Options Trading

You can use Options to limit risk or to protect your existing share portfolio against a fall in value. When the market is flat you can write Options over your existing share portfolio to generate income in times of low capital growth. There are two types of Options – Call Options and Put Options. Both can be bought or sold, or used in combinations to create strategies suited to your risk tolerance. Options positions should be looked at from both the standpoint of the BUYER (or taker) and the SELLER (or writer).

  • Bought Call Options give the BUYER the right (but not the obligation) to buy a specific number of securities, for a specific price, on or before a set date.
  • Bought Put Options give the BUYER the right (but not the obligation) to sell a specific number of securities, for a specific price, on or before a set date.
  • Sold Call Options oblige the SELLER to deliver stock if required (exercised) by the BUYER, at the agreed price and quantity up until expiry of the option.
  • Sold Put Options oblige the SELLER to buy the stock if required (exercised) by the BUYER at the agreed price and quantity up until expiry of the option.

How does a CommSec Options Trading Account work?

  • Link your Options account to your CommSec Share Trading Account or Margin Lending Account to lodge shares as collateral.
  • Provide cash margins from your linked CBA account or your CommSec Margin Lending Account.
  • Place your Options trades online or over the phone; all trades settle one business day after execution.

There are four levels of Options trading that can be used to determine which strategies you can use, depending on risk levels. Learn more about Options trading level.

Benefits

Generate income

If you're expecting the price of a share you own to remain flat or fall slightly, you can earn extra income by writing Call Options and receiving the premium upfront.

Protect your portfolio

Protect your shares against a fall by buying a Put Option that locks in the shares' sale price for the life of the option. If the share price rises, your gain is reduced only by the premium paid.

Trade your perspective

Options are a flexible tool that you can use with a range of strategies in all market conditions (rising, falling, flat). You can trade them over the time horizon that best suits your view.

Small initial outlay

With Options, you can potentially make higher returns from a smaller initial outlay than investing directly. You may benefit from changes in share price without paying the full price of the share...

Diversify your portfolio

With a smaller initial outlay, you can have a more diversified portfolio than if you bought shares directly. You can also use Options over an index to trade your view on the general market direction.

Time to decide

A Call Option gives you time to decide on buying shares. Once you pay the premium (a fraction of the share price) and lock in a buying price, you can buy the shares any time before the option expires.1

Risks

Market risk

Options may fall in value or become worthless. Changes in the underlying share price may change the Option price, but the option price change may be in a different direction or magnitude.

Time decay

Options have an expiry date and therefore a limited life. An Option's time value erodes over its life and this accelerates as an Option nears expiry.

Leverage

Leverage can lead to large losses as well as large gains. If your initial outlay is small relative to the total contract exposure, a small market movement may have a larger impact on its value.

Option writers may face unlimited losses

Selling Options involves significant risk. If you sell and the position moves against you, you may lose more than any premium received. Where the position is naked, losses are potentially unlimited.

Liquidity risk

Your ability to trade out of a strategy may depend on a quote from a Market Maker. Market Makers are important to provide liquidity, but their obligation to provide quotes is not unqualified.

Calls for additional margin

If the market moves against you or margins increase you may have to provide additional funds at short notice. If you do not, your position may be closed and you will be liable for any resulting loss.

Rates and fees

Trade execution

Brokerage fee amount by transaction value1,2,3

Exchange-Traded Options4 traded online (via website),5 (also charged on the subsequent share transaction6 upon exercise or assignment of the option)

$34.95 (up to and including $10,000)
0.35% (above $10,000)

Exchange-Traded Options4 traded over the phone5 (also charged on the subsequent share transaction6 upon exercise or assignment of the option)

$54.60 (up to and inclulding $10,000)
0.54% (above $10,000)

1 Alternative brokerage rates may be agreed from time to time and (if agreed to) will be payable under the General Conditions of Trade within the ETO PDS and Terms and Conditions. If you are offered, and agree to a tiered brokerage rate, this may result in brokerage charges that differ from rates expressly disclosed within the CommSec FSG.

2 Unless otherwise indicated, where a fee or charge is expressed as a percentage, it refers to a percentage of the transaction value. For GST rounding reasons, the final brokerage fee may result in a slight variance from the stated or expected charge, which may exceed two cents for large trades.

3 Brokerage charged (shares, warrants, listed managed investments and derivatives): Brokerage at these rates applies each time you trade a stock, warrant, listed managed investment or derivative.

4 ETO contract fees also apply. See the “Other fees and charges” section of the CommSec FSG.

5 For ETO multi-leg orders, brokerage is charged on each individual options leg. The execution of an equity leg (an Australian listed share transaction), traded as part of an options multi-leg order will incur ‘Australian listed shares’ fees and charges as disclosed in the CommSec FSG.

6 Listed equities transactions that result from an exercise or assignment of ETO contracts are charged at the same rate of brokerage as the original ETO transaction. For this reason the brokerage charged on the listed equities transaction arising from an exercise or assignment of an ETO contract may differ from and overrides the default rates set out in the CommSec FSG.

ETO Contract fees (per contract)

Amount per contract7

Equity Option Contract (Open/Close)

$0.13 (GST exclusive)

Equity Option Contract (Exercise/Assignment)

$0.05 (GST exclusive)

Index Option Contract (Open/Close)

$0.45 (GST exclusive)

Index Option Contract (Exercise/Assignment)

$0.35 (GST exclusive)

7 ETO Contract fees have been set out on a GST exclusive basis as the total GST may be rounded in accordance with the GST law.

Fees and rates are subject to change

Other fees and charges

Amount

Late settlement fee8

$100

Rebooking fee

$25 per rebooking

8 Please note that CommSec requires all clients to ensure cleared funds are available to meet settlement obligations. Multiple direct debit rejections may lead to trading restrictions being imposed on your account. A direct debit rejection will be treated as a late settlement.

Who can apply?

You can apply for an Options Account if you are:

  • 18 years or older with an Australian residential and postal address; or
  • An Australian registered or incorporated company; or
  • An Australian trust or SMSF; and
  • Able to pass the Options Trading assessment

 

You must have the following:

  • A CommSec Share Trading Account in the same name; and
  • A Commonwealth Direct Investment Account (CDIA) or CommSec Margin Loan or CommBank account in the same name for settlement of trades

What you’ll need if you’re new to CommSec:

  • ID (e.g. driver’s licence or passport)
  • SMSF name and Australian Business Number (ABN)
  • Company details and Australian Company Number (ACN)
  • Certified copy of the Trust Deed (if applicable)

Get started

Open a CommSec Options Account

To trade Options with CommSec, you'll need a CommSec Share Trading Account and a Commonwealth Direct Investment Account (CDIA). To help you get started:

Already a CommSec customer?

Opening a CommSec Options account couldn’t be easier. Login to CommSec below and follow the prompts to add Options to your list of accounts.

Please ensure that you have our linked cash account2 or a CBA bank account to use for settlement.
Login to apply >

Not a CommSec customer?

You’ll need to become a CommSec customer before opening an Options account. Join now to open a standard Share Trading Account and select ‘Use our cash account'2.

It’s quick, easy to set up and you’ll be trading in a matter of minutes.
Join now >

Frequently asked questions

To find out how to use the CommSec website to place an Options order, read the CommSec Options Web Guide.

Exercising an options contract refers to the process where the holder (buyer) of the option invokes their right to buy (in the case of a call option) or sell (in the case of a put option) the underlying asset at the predetermined price (strike price) on or before the expiration date of the contract. This action is typically carried out through the options clearinghouse and involves either buying or selling the underlying asset, depending on the type of option held.

It is important to note that index options are cash settled, hence there would no physical delivery of underlying asset upon exercise.

There are four trading levels available for Options accounts. Each level identifies the type of transactions you are permitted to perform on the account.

Below is a summary of trading levels and transactions permitted:

  • Level 1: Buy Calls and Puts to open + Sell Calls and Puts to close
  • Level 2: Level 1 + Sell Specific Covered Calls
  • Level 3: Level 2 + Sell Uncovered Options (Calls)
  • Level 4: Level 3 + Sell Uncovered Options (Puts)

Learn more about the characteristics of each Options account level, likely investment objectives and potential financial risks.

What level is my account?

You can find your Options account level via CommSec website. Simply, login to your account and navigate to Portfolio, the account level is next to your Options account number.

How do I upgrade my account level?

Download and complete the Trade Level Change Form. This form can be located online by logging into CommSec and navigating to Help > Forms & Brochures > Derivatives, then selecting the Trade Level Change for Exchange Traded Options Form.

Return the completed forms to us via either of the below:
Email: CommsecDerivatives@cba.com.au.
Post: CommSec - Locked Bag 22, AUSTRALIA SQUARE NSW 1215

Before submitting a request to change your Options trading level, you should carefully consider your relevant circumstances including your experience, investment objectives, financial resources, and risk appetite.

Important information

There can be high levels of risk associated with trading in Options. Only investors familiar with the risks of Options trading should consider these products.

CommSec recommends that you seek independent taxation advice before entering into any Options strategies. The ASX provides general information on Taxation Treatment of Exchange Traded Options.

If you only buy Options, there would be no margin obligations. It is when you write Options that require non-specific or cash cover, that margin obligations may occur.

Margins are designed to protect the financial security of the market. If you write an Options contract, you have a potential obligation to the market because the taker of the Option may exercise their position. A margin is an amount that is calculated by ASX Clear as necessary to ensure that you can meet that obligation of your entire Options portfolio on that trading day. A broker may apply additional margin requirements on top of the ASX Clear Margin Calculation, or perform its own client obligation calculation to ensure it maintains sufficient collateral from its client to satisfy its own risk appetite.

Margin obligations are generally recalculated daily, but in extreme market events, they may be calculated more than once a day to ensure an adequate level of margin cover is maintained. This means that you may have to provide more collateral or pay more to meet your margin obligation if the market moves against you. If the market moves in your favour, your margin obligation may fall.

Below are some scenarios that may increase your margin obligations:

  • The market moves against you relative to your position/portfolio, thus increasing your potential obligation under the options contract/s.
  • ASX Clear increases the margin requirement on your positions, or, alternatively reduces the collateral value allowed on your shares lodged as cover.

CommSec’s Options margin obligation is the sum of the amounts that each of ASX Clear and CommSec separately calculate as necessary to ensure that you can meet your obligations to the market.

Total Margin = ASX Clear Margin + CommSec Margin

CommSec will generally require you to provide an additional amount of margin in addition to the ASX Clear Margin (CommSec Margin). For example, where CommSec considers that the existing margin is insufficient to cover the risk of your open position and having regard to market volatility.

CommSec may require a client who has written Options to provide additional cash or stock as collateral for their open positions, which is referred as Options margin call. Failure to meet a margin call may result in CommSec closing down your options positions without further reference to you.

How do I meet my margin obligations?

You can view the total margin required on your Options portfolio on your Position and Financial Statements which are sent to you daily while you have an open position, or from the CommSec website and take action to ensure your margin obligations are met as required. From time to time, you may also receive a phone call from the CommSec Options Desk to notify you regarding the margin obligations.

In general, CommSec will use eligible ASX-traded securities from your portfolio as collateral to provide security for your margin obligations. It is important to note that ASX Clear will apply a percentage discount (haircut) to the valuation of the securities held as collateral. In the event that all your eligible securities are lodged and your margin obligations exceed the total collateral valuation, then cash will be debited from your nominated bank account for your margin obligations.

If you incur a margin obligation, you are required to provide cash or ASX Clear Acceptable Collateral to CommSec by 2pm on the same trading day.

Please note: Once securities are lodged as collateral to cover margin requirements, they are unavailable for further trading through the online trading facility. Any collateral lodged can be released by calling CommSec Options Desk. Alternatively, log into CommSec and navigate to Portfolio > Accounts (Select Options account) > Transfer Shares (under Lodged Collateral) and complete the Recall Unutilised Shares request.

We're here to help.

For more information, please call the CommSec Options Desk on 1800 245 698 (8am to 5:30pm, Monday to Friday, Sydney time).

Log into CommSec and navigate to Portfolio > Accounts (Select Options account) > Transfer Shares (under Lodged Collateral) and complete the Recall Unutilised Shares request.

Note: You cannot request a stock release by email.

We will release your stock within 24 hours of receiving your online request, provided you still have sufficient collateral to meet your margin. Once your request has been processed, you will be able to view the changes to your linked share trading account online — units in the released stock will be moved from 'reserved' to 'available'.

Once it has been released you can sell it online or over the phone.

If you wish to sell reserved stock or require assistance, please contact us on 1800 245 698 from 8am to 5.30pm (Sydney time), Monday to Friday.

Automatic exercising is a feature where open positions that are due to expire in-the-money are automatically exercised for you, so you don't need to take any action. We will automatically exercise any Options position that is in-the-money on the date of expiry, by one cent or more for share Options and one point or more for index Options. If you don't want to exercise an Option that is in-the-money, you must notify CommSec no later than 4.30pm on the Option’s expiry date. You can ask for automatic exercising to be disabled on your account for all positions.

The definition of ‘in the money’ depends on whether you are talking about a Call Option or a Put Option. (Although ‘in the money’ indicates a positive position, it does not guarantee a profit because it does not take into account the cost of your position.)
A Call Option is ‘in-the-money’ when the share’s current market price is above the call’s strike price. In other words, if you are the holder of the Call Option, you have the right to buy it for less than its current market price.
A Put Option is ‘in-the-money’ when the share’s current market price is below the Put’s strike price. If you are the holder of the Put Option, you have the right to sell it for more than its current market price.
‘Out of the money’ means the converse for Call and Put Options. A Call Option is ‘out of the money’ when the share’s current market price is below the call’s strike price; for a Put Option, it is ‘out of the money’ if the current market price of the share is above the Put’s strike price.
‘At the money’ means the same thing for both Call and Put Options: the Option’s strike price is the same as the current market price of the underlying share.

Trading strategies

Hedge your stocks against a fall in value, providing protection in times of market uncertainty.

Find out more about Protective Puts

Generate additional income in a market that is flat to moderately bullish.

Find out more about Covered Calls

Use a written Put to generate extra income in flat to rising markets.

Find out more about Short Puts

Use this event-driven strategy where you expect a large movement up or down. Often used around corporate announcements. 

Find out more about Long Straddles

This strategy is similar to a Long Straddle with a lower cost to buy but requiring a larger movement to profit. 

Find out more about Long Strangles

Use this range-trading strategy to profit if the price of the underlying shares stays within a narrow range. 

Find out more about Short Strangles

This is a lower cost way than a direct investment to gain exposure where you believe there will be a moderate price rise. 

Find out more about Bull Spreads

This is a lower cost way than a direct investment to gain exposure where you believe there will be a moderate price fall.

Find out more about Bear Spreads

Use this strategy if you expect a slight rise in the market, but see the potential for a sell-off.

Find out more about Ratio Call Spreads

Use this strategy to generate extra income where you believe the market will remain stable, with protection against an unexpected movement in either direction. 

Find out more about a Long Butterfly strategy

This strategy looks to profit from selling options over the index (XJO).

Find out more about Short Index

Financial Services Guide

The Financial Services Guide ("FSG") provides information about Commonwealth Securities to help you decide whether to use the financial services we offer.
Download the Financial Services Guide
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Before you obtain any products or services from CommSec, you must view the most recent Financial Services Guide (FSG).

By clicking YES below I am agreeing to be given the FSG and PDS electronically by downloading these documents from this website.

 

 

Note: If you would like to receive the CommSec Financial services Guide (FSG) and relevant Product Disclosure Statement (PDS) by mail  please contact us on 13 15 19.

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Product Disclosure Statement and Terms and Conditions

This document outlines how the product operates; overview, benefits, risks and complete costs. It also provides details about the application process and next steps.
Download the Product Disclosure Statement and Terms and Conditions
CommSec Document Download Acceptance

Before you obtain any products or services from CommSec, you must view the most recent Financial Services Guide (FSG).

By clicking YES below I am agreeing to be given the FSG and PDS electronically by downloading these documents from this website.

 

 

Note: If you would like to receive the CommSec Financial services Guide (FSG) and relevant Product Disclosure Statement (PDS) by mail  please contact us on 13 15 19.

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Target Market Determination

The target market for this product can be found within the product's Target Market Determination.

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Important Information

1 Applicable to American-style Options. European-style Options can only be exercised on the expiry date.

2 The target market for this product can be found within the product’s Target Market Determination, available here.

The information on this site has been prepared without taking into account the objectives, financial or taxation situation or needs of any particular individual. For this reason, any individual should, before acting on the information on this site, consider the appropriateness of the information, having regards to the individual's objectives, financial situation and needs, and if necessary, seek appropriate professional advice.

The target market for this product can be found within the product’s Target Market Determination, available here.

A Product Disclosure Statement for Exchange Traded Options (Options) issued by Commonwealth Securities Limited ABN 60 067 254 399 AFSL 238814 is available from www.commsec.com.au and should be considered before making any decision about the product. There can be high levels of risk associated with trading in Options; only investors familiar with the risks of Options trading should consider these products.

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© Commonwealth Securities Limited ABN 60 067 254 399 AFSL 238814 (CommSec) is a wholly owned but non-guaranteed subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945. CommSec is a Market Participant of ASX Limited and Cboe Australia Pty Limited, a Clearing Participant of ASX Clear Pty Limited and a Settlement Participant of ASX Settlement Pty Limited.

The information on this page has been prepared without taking into account your objectives, financial situation or needs. For this reason, any individual should, before acting on this information, consider the appropriateness of the information, having regards to their objectives, financial situation or needs, and, if necessary, seek appropriate professional advice.

CommSec does not give any representation or warranty as to the accuracy, reliability or completeness of any content on this page, including any third party sourced data, nor does it accept liability for any errors or omissions.

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