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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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Day Trading Margin Calls

Day Trading Margin Calls

Market BasicsStocks & ETFsThe rules permit a day trader to trade up to four times the maintenance margin excess in the account as of the close of business of the previous day. If a day trader exceeds the day-trading buying power limitation, the firm...

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Day Trading Margin Calls

Introduction to Day Trading

Market BasicsStocks & ETFsDay trading refers to buying then selling or selling short then buying the same security on the same day. Just purchasing a security, without selling it later that same day, would not be considered a day trade. Does the rule...

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Day Trading Margin Calls

Day Trading Requirements

Market BasicsStocks & ETFsThe rules adopt the term “pattern day trader,” which includes any margin customer that day trades (buys then sells or sells short then buys the same security on the same day) four or more times in five business days. Under...

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