I briefly mentioned about the PDT rule (pattern day trading) that applies to trading stocks options. It states that any trader with less that $25k in their account cannot do more than 3 day trades in a 5 day period.
A day trade is the opening (through buying or selling) of a stock, then the closing of that same stock within the same day. I trade 0 DTE (days till expiration)// same day trading only so I must suffer this rule, since my trading account is well under the $25k cutoff.
There are ways around the PDT rule such as trading longer periods (longer DTE), simply letting options expire, (more risky, but something I used to do) or even buying or selling the corresponding opposite positions to any ones originally opened.. this one is pretty slick but does have some disadvantages also.
You might be wondering what happens to a trader if they break the PDT rule..
The broker will send you a nice email issuing you a margin call. You can 1. deposit funds into your account to bring it to over $25k or 2. they kindly freeze your trading for 90 days! :(
My broker used to let its clients reset the rule if needed.. two times per year, but I guess they cracked down on the rule and now we only get 1 shot.
Anyway, I just wanted to show this to everyone in case you were curious about it. I am glad my broker, at least, has a counter that shows people how many day trades they have remaining. Not all brokers do this..
