Saxo Bank White Label Rules Update for Short Selling Stock Options

Saxo Bank has issued an important update for its White Label (WL) partners regarding the short selling of stock options. The new policy aims to simplify access while maintaining risk controls for end-clients engaging in option trading.

From now on, WL clients who want to short sell stock options—whether as part of a covered call, naked short, or other option strategies—must first be through Saxotools by applying the “Expert” profile. This is a prerequisite to ensure that clients have the appropriate trading permissions.

Saxo Bank White Label Rules Update for Short Selling Stock Options

A key change in Saxo’s approach is that all clients can now short stock options by default when holding the underlying shares in their accounts. This means that initiating a covered call no longer requires modifying the CO Trading profile, making it easier for clients to use this strategy without extra administrative steps.

However, WL clients interested in opening naked short option positions or engaging in more complex option strategies still need to have the CO Trading profile set to “Expert.” This remains a necessary safeguard given the higher risks involved.

To further protect clients, Saxo Bank has introduced an error message to prevent accidental naked short positions. Clients attempting to close their share positions while still holding a covered call will be blocked by the following alert:

“Closing the underlying position used in a covered call strategy is not allowed for high-risk rating security. Close the short call option(s) first.”

This measure ensures clients cannot inadvertently leave themselves exposed by closing the underlying shares without first closing the short option leg. It reinforces Saxo’s commitment to responsible trading practices within its WL ecosystem.

White Label partners have to update their clients accordingly to ensure smooth trading experiences under the new rules.

Company Overview

Saxo Bank stands out as a premier multi-asset broker, offering exceptional research capabilities and an exceptional trading platform, along with an impressive array of over 70,000 tradable instruments, which include spot forex, FX options, NDFs, CFDs, stocks, stock options, exchange-traded funds, ETNs, futures, and 33,000 bonds. For engaged traders, Saxo Bank offers a comprehensive and immersive trading journey, boasting an extensive toolkit, research resources, and premium features.

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