Options - Exchange Traded Options

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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

Brokerage Rates

Trade execution	Brokerage fee amount by transaction value^1,2,3
Exchange-Traded Options⁴ traded online (via website),⁵ (also charged on the subsequent share transaction⁶upon exercise or assignment of the option)	$34.95 up to $10,000 in premium 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 $10,000 in premium 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.

Trade execution

Brokerage fee amount by transaction value^1,2,3

Exchange-Traded Options⁴ traded online (via website),⁵ (also charged on the subsequent share transaction⁶upon exercise or assignment of the option)

$34.95 up to $10,000 in premium
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 $10,000 in premium
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

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

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.

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

How do I place an order on my Options account?

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

What is exercising an option?

Exercising an Options contract is where the buyer of an Option asks CommSec to complete the obligations of the Options contract. Learn more

What are Option trading levels?

When you apply for a CommSec Options Account, you will be asked to select a trading level based on your previous options trading experience and your understanding and acceptance of the risks involved. There are four Options trading levels, which determine the type of strategies you can use on your account and the level of risk involved. As you gain experience, you can move to a higher level by completing a CommSec Trading Level Upgrade Form.

What are the tax effects of Options?

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.

What are margin and how are they calculated on my Options account?

Margins are essentially collateral - in the form of cash or share holdings - that you need to provide to ensure that you can meet your obligation in the event of an adverse market movement. Margins are only payable by Option writers (sellers); Options buyers do not need to pay margins. Margins are calculated daily by ASX Clear, the clearing house for all shares, structured products, warrants and ASX equity derivatives. It calculates margins on all the written positions in your ASX Options portfolio, and the amount payable is the net amount on all positions. The total margin required for open positions in a CommSec Options account are as follows:

Total Margin = (1 x Premium Margin) + (2.5 x Risk Margin)

To estimate your total required margin you can use the ASX Margin Estimator or refer to the ASX resource, Understanding Margins. It is important that you monitor your margin requirements, as they vary daily and must be covered at all times. Please be aware that CommSec conducts daily stress tests on short positions which may result in your collateral requirements being higher than your daily total margins.

How do I settle my margin requirements?

You can settle your margin requirements with cash, or by lodging eligible security with CommSec. The list of ASX Clear Acceptable Stock is determined by ASX Clear.

How do I release stock held as collateral with ASX Clear?

TYou can call us on 1800 245 698 from 8am to 5.30pm (Sydney time), Monday to Friday. Alternatively, you can login to the CommSec website and request a stock release using the 'Portfolio' tab. Please note that 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'. If you wish to sell reserved stock, please contact us on the number above for it be released. Once it has been released you can sell it online or over the phone.

What is 'automatic exercising'?

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.

What does 'in the money' mean?

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

Protective Puts

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

Find out more about Protective Puts

Covered Calls

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

Find out more about Covered Calls

Short Put

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

Find out more about Short Puts

Long Straddle

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

Long Strangle

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

Short Strangle

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

Bull Spread

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

Bear Spread

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

Ratio Call Spread

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

Long Butterfly

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 stragegy

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

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

Target Market Determination

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

Other Forms & Brochures

For all other forms & brochures regarding other financial services we offer.

If you are looking for administrative forms, please login and proceed to Support > Forms & Downloads.

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Important Information

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

²The 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.