Stock Trading and Other Things

Does the SEC pattern day trader rule apply to options trading?

Can I buy and sell options on the same day repeatedly without having my account frozen?

Public Comments

1. SEC day trading restrictions only apply to stock mkts in the US. That being said, it applies to stock options the same as it does stocks.

Futures, commodities and currencies can be day traded without any restrictions. Those might be better and easier to turn profit off of anyway.

You can also put 25k in the account (if you have it) and then you dont have to worry about it.

2. Short answer is yes, the PDT rules apply to options too.

Summary of the rules:

If an account is idenified as a "pattern day trader" the firm must require $25,000 minimum equity in the account. If you make four round-trip day trades in any five day period, you'll be identified as a pattern day trader. Also, any firm that promotes a day trading strategy in their marketing must apply the minimum to all accounts.

When that minimum is met, the firm will extend 4:1 leverage on the money. So a PDT account that funds the account for $30k will have $120K in day trading buying power. That buying power MUST only be used for day trades. If you use the full DTBP and hold the position overnight, you're going to have one pissed-off margin department on the phone the next day. And recognize that it is entirely your responsibility to police this -- when you place the opening trade the system has no idea if you intend to trade the position intraday or hold it overnight. I strongly suggest that you use a day trading account only for day trading positions.