How to Live Day Trade Cheap Options
Day Trade Buying Power is the amount that an account can day trade without incurring a day trade call. In an Unrestricted account, this amount is calculated by adding Core Cash to Exchange Surplus and dividing that total by the underlying exchange requirement of the security being traded, which is 25% for most stocks.
Options are considered non-marginable so the underlying requirement is 100%.
Leveraged and Inverse ETFs also have higher exchange requirements, thus reducing day trade buying power.
A Restricted status will reduce the leverage that an account can day trade.
An account with a day trade restriction will reduce Day Trade Buying Power to the equivalent of the Exchange Surplus without the use of time & tick for 90 days.
Day Trade Call
A Day Trade Call is generated whenever opening trades exceed the account's Day Trade Buying Power and are closed on the same day. Customers have five business days to meet the call by depositing cash or marginable securities in the account.
The sale of an existing position may satisfy a Day Trade Call but is considered a Day Trade Liquidation. Three Day Trade Liquidations within a 12-month period will cause the account to be restricted.
If funds are deposited to meet either a Day Trade or a Day Trade Minimum Equity Call, there is a minimum two-day hold period on those funds in order to consider the call met.
Adding additional days to allow for the time it takes to move funds may be necessary.
Any distributions or checks written out of the account during the open day trade call period will increase the call dollar for dollar. If a Day Trade Call of a Pattern Day Trader is not met by the due date, the account will be restricted.