Reasons to invest in ETOs with nabtrade
Great value
Enjoy great brokerage and a competitive high interest rate for your cash.
One destination
Access to one platform for all your investments.
Real-time data
Stream live ASX data so you can make real time investment decisions.
About Exchange Traded Options
Exchange Traded Options (ETOs) are a derivative security which means their value is derived from another asset, typically a share or (stock market) index.
An ETO gives you the right but not the obligation to buy or sell a given security at a certain price within a given time.
There are two main types of ETOs: Calls - the right to buy, and Puts - the right to sell.
Trading ETOs is risky and should not be attempted unless you have a sound understanding of their characteristics and the market they operate in.
Pricing
| Type of trade | Fee or brokerage | Amount |
|---|---|---|
Online trading (transaction size) | Up to and including $10,000 | $34.95 |
| Above $10,001 | 0.35% of trade value | |
| Over the phone | All | $49.95 or 0.55% of trade value (whichever is greater) |
General Advice Warning
Any advice contained on this page has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice we recommend that you consider whether the advice is appropriate for your circumstances and you obtain and consider the relevant Product Disclosure Statement or other disclosure document available at nabtrade.com.au, before making any decision about a product including whether to acquire, dispose or to continue to hold it.
WealthHub Securities Limited ABN 83 089 718 249 AFSL No. 230704 is the issuer of the nabtrade Exchange Traded Options Product Disclosure Statement ("PDS"). The Target Market Determination for this product is available at nab.com.au/tmd
Benefits
Protection
You can use ETOs to hedge or protect your share portfolio against a drop in value. For example, buying put options over shares allows you to lock in a sale price during the life of the option, regardless of share price movements.
Income
Shareholders can earn income by selling call options over shares they already hold.
Time to decide
If you buy a call option, the purchase price for the underlying share is locked in until the ETO expiry date.
Leverage
The initial outlay for an options contract is less than you would need if you were to invest directly in the underlying shares.
Diversification
Because your initial outlay is lower when you trade options, you can diversify your portfolio and gain broader exposure to a range of shares, or even a market index.
Risks
Limited life span
ETOs have a limited life span. Their time value falls as they approach their expiry date, and they’re worth nothing after they expire.
Market movements
ETOs are affected by movements in the underlying share or index. If the market moves against you, your ETOs may fall in price or become worthless at or before their expiry date.
Leverage
The high degree of leverage involved in many ETOs can work against you, multiplying losses if the market moves against you.
Loss of premium for buyers
If you buy an option and it expires worthless, you’ll lose the premium you paid for the option, plus transaction costs.
Unlimited loss for Call Writers (sellers)
As the seller of an ETO, you earn a premium. However, it’s important to be aware that you can also incur unlimited losses if the market moves against an uncovered (naked) Call position.
Get started with nabtrade
Every new nabtrade customer receives:
- A domestic trading account
- An international trading account
- An integrated cash account
Additional service options include:
- nabtrade High Interest Account
- nabtrade IRESS ViewPoint
- NAB Margin Loan
- Self Managed Super Fund setup and management services
Get started today
- Apply - Complete the application form - you can select from an Individual, Joint, Company or SMSF/Trust account.
- Add cash to your account - watch the tutorial.
- Start trading - Login to nabtrade on desktop or download our app.
Funding options for ETOs
There are two ways to fund your investment:
Add cash to your account
Every nabtrade account comes with a linked cash account.
Borrow to invest
With a NAB Margin Loan you can borrow to invest.
