Does the Day Trading Rule Apply Only if I Use Leverage?

May 14, 2020

No, the rule applies to all day trades, whether you use leverage (margin) or not. For example, many options contracts require that you pay for the option in full. As such, there is no leverage used to purchase the options. Nevertheless, if you engage in numerous options transactions during the day you are still subject to intra-day risk. You may indeed incur substantial loss due to a pattern of day-trading options. Again, the day-trading margin rule is designed to require that funds be in the account where the trading and risk is occurring.

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