When day trading multi-leg options, total day trades are calculated based on how you open and close each strategy.
Here are some general rules for day trading multi-leg options:
1. If you open a position as a strategy (ex. straddle, iron condor, butterfly, etc.) and close it as that strategy on the same day, this will count as one day trade.
Example: You place an order to open a vertical call spread on XYZ (buy XYZ 73.00C and sell XYZ 78.00C). Then, you place one order to close out the entire strategy on the same day. This would count as one day trade, because you opened and closed the position as the entire strategy.
Keep in mind, if you do not place the closing order all in the same order ticket, it could count as more than one day trade.
2. If you open a position as a strategy and close it via multiple orders on the same day, the number of day trades counted will depend on the number of orders placed to close the position.
Example: You place an order to open a straddle on XYZ (buy XYZ 73.00C and buy XYZ 73.00P). Then, you place one order to close out the call as the stock is going up, and another later to close out the put as the stock begins to trend down. This will count as two day trades, because you closed out both contracts separately.
3. If you open a strategy as multiple orders and then close it all in one order on the same trading day, the number of day trades depends on the number of trades used to open the strategy.
Example: You place a trade to purchase an XYZ 73.00P and another order to purchase an XYZ 78.00C, thus creating a straddle position on XYZ. Your position becomes profitable, and you decide to close out both contracts as a straddle. This would count as two day trades, because you originally opened the straddle as two separate orders.
4. PDT and DTBP Rules
When you trade options using multi-leg orders (strategies), only the rules for calculating total day trades are affected. All other option related topics, such as rights, day-trade buying power, or the rules on day-trading margin calls after you are flagged as a pattern day trade remain the same.
This content is for informational and educational use only and is not a recommendation or endorsement of any particular investment or investment strategy. Investment information provided in this content is general in nature, strictly for illustrative purposes, and may not be appropriate for all investors. It is provided without respect to individual investors’ financial sophistication, financial situation, investment objectives, investing time horizon, or risk tolerance. You should consider the appropriateness of this information having regard to your relevant personal circumstances before making any investment decisions. Past investment performance does not indicate or guarantee future success. Returns will vary, and all investments carry risks, including loss of principal.
Moomoo is a financial information and trading app offered by Moomoo Technologies Inc.
In the U.S., investment products and services available through the moomoo app are offered by Moomoo Financial Inc., a broker-dealer registered with the U.S. Securities and Exchange Commission (SEC) and a member of Financial Industry Regulatory Authority (FINRA)/Securities Investor Protection Corporation (SIPC).
Options trading entails significant risk and is not appropriate for all customers. It is important that investors read Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount. Supporting documentation for any claims, if applicable, will be furnished upon request.
Day trading generally isn’t appropriate for someone with limited resources, limited investment or trading experience and low risk tolerance. A day trader should be prepared to lose all of the funds used for day trading. Before considering day trading, read and understand the Day-Trading Risk Disclosure Statement.
