Originally Posted by 79protons
You are not on margin in this trade. You buy a put and a call to protect the put and call you sell and also you have cash in the account from the net credit you received from the sale in the event the stock moves past both of your put and call prices. Anyway, this is just a net credit spread, which is allowed at etrade in ira and roth at option level 3, which I am approved for.
I have read an academic paper about this sort of thing, though with different types of offsetting derivatives. So it is not unknown, and very likely these sorts of risk free strategies sooner or later will be shut down. Once something is all over the internet it is usually about over.
Two possible issues that I see. One, your IRA custodian may not allow you to do it. So before you spend much time here, call your broker and be sure that it can be done.
And two, the IRS could question the business pupose of these transactions, (correctly) assuming that it is a tax fiddle, and invalidate one or more of them.
SSRN-High Volatility, Negative Correlation, Roth IRA Conversions, and the Codified Economic Substance Doctrine by Gregg Polsky