Pattern Day Trading (PDT)
Regulatory rules define a Day Trade as the purchase and sale, or the sale and purchase, of the same security (including options) on the same day (regular and extended hours) in a margin account. It is also known as a 'round trip'.
For clarification, a same-day round trip (opening and closing) of an options spread will also qualify as a Day Trade.
If you wish to day trade regularly, you must comply with day trading rules.
Regulatory rules state that a Pattern Day Trader (“PDT”) is any margin account that executes four (4) or more Day Trades in any rolling five (5) trading day period. Therefore, an account may make up to three (3) Day Trades in any rolling five (5) trading day period without being designated as a PDT.
A Pattern Day Trader (“PDT”) account must maintain a minimum equity of $25,000 on any day on which Day Trading occurs. A PDT account with greater than $25,000 may continue to Day Trade freely. A PDT account with less than $25,000 may be issued an Equity Maintenance (“EM") Call to bring the account up to the $25,000 requirement. The account may also be restricted to closing-only trades while the EM Call is outstanding.
An account designated as a Pattern Day Trader (“PDT”), which has less than $25,000 in equity, may be restricted to closing-only trades until an open EM Call is met. However, you may also request a 'PDT Reset' to meet the EM Call and clear the PDT designation. Please note that you are only permitted to enter one PDT reset request in the lifetime of your account.
Options AI customers are able to request one (1) PDT Reset in the lifetime of the account. If submitted prior to 4:00pm EST, a successful PDT reset will usually take effect the following trading day, but can take up to two (2) business days.
PDT Status Termination Form.pdf
107KB
PDF
Day Trade (DT) Calls are separate from Equity Maintenance (EM) Calls that occur as a result of an account being designated as a Pattern Day Trader (PDT). However, they may also occur in relation to Day Trading. DT Calls can be generated by opening trades that exceed the start of day buying power of an account (using newly released buying power from other closing positions) and subsequently closing those trades same-day.
Regulatory rules do not permit the trading of defined-risk option spreads (or naked short options) in a cash account. Anything beyond level 1 options requires a margin account. Since Options AI was designed for more advanced options trading, we do not offer cash accounts at this time.