Profit potential from any market direction

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. Options strategies can be as simple or as complex as you want.
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.

How it works

Market movements

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.

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

Minimum*

Above Minimum* (flat)

Internet (also charged upon exercise or assignment of the option)

$34.95 up to $10,000 in premium

0.35% (above $10,000)

Phone (also charged upon exercise or assignment of the option)

$54.60 up to $10,000 in premium

0.54% (above $10,000)

*All of the above brokerage rates are on a per trade basis and include GST

ETO ASX Clear fees per contract

Amount per contract1

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)

1ASX Clear 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

Option fail fee per day

$100

Late settlement fee

$100

Equity fail fee per day (assignment and exercise)

$100

Rebooking fee

$27.50

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 account 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’.

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

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 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

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

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.

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.

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.

 

Disclaimer

This site is directed and available to and for the benefit of Australian residents only. © 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 and both entities are incorporated in Australia with limited liability.

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