day traders new margin rules for leveraged etfs

http://etfdailynews.com/blog/2010/0...-the-popular-direxion-financial-etfs-faz-fas/

For example, pattern day traders in margin accounts using ProShares funds that multiply returns by a factor of 2 would have a $50,000 minimum daily maintenance requirement. Such traders favoring Direxion triple-exposure funds would have a $75,000 minimum daily maintenance requirement.”

 

I haven't noticed this rule being applied to my account at IB, which is now, sadly, below $75K. Maybe it will take effect soon, though. I hope not. In any case, we can always do our day trading in Canada with the Horizons Beta funds that offer 2X structured products (wrongly called ETFs). The PDT bull of the US doesn't apply outside of our militant borders, thankfully. You can day trade all you want in Canada, Japan, the UK, Australia, etc., with total impunity from the SEC. Account balance is irrelevant. In Canada and the UK, one has access to leveraged products, but not in Japan, I don't think. Unfortunately, Direxion has yet to set up shop outside the fascist jurisdiction of the US. Maybe we can tempt the good folks at Horizons, who have all kinds of awsome products already, like spread ETFs, etc., to start up with a 3X. Let's hound them 'till they give in!

 

one more reason to trade futures

 

I was looking for someone to talk to this issue. The last two years in a small margin account I've been selling SSO (option)straddles/strangles. When this change happend May 1 my margin jump was such that I had to cut back on my position...kind of pissed me off since the call side was just starting to be profitable and I way OTM on the put side. Anyhoo decided Nkhoi is right and am switching to ES options.

Its really annoying because is the "big" boys screwing around with the market...not us little guys

 

Are you sure the increase in margin requirements is due to the institution of the new PDT rule concerning leveraged funds, as opposed to just the recent market volatility? I know IB raised margin requirements recently (and for futures too) explicitly because of the volatility that's come about in the last couple of weeks. In any case, I didn't understand that the rule had anything to do with performance bond requirements, but merely that it would now be necessary to maintain a higher account balance in order to day trade with complete freedom. The bottom line is that you might want to check with you broker as to whether the margin jump will be reduced in the event of a decline in market volatility. Let me know if I'm totally off base in my perception of the issue.

 

It was NOT volitility...I received notice on April 29th that "due to changes in rules on margin requirements, 2X ETF's would require 2X the margin of reg ETF's...3XETF's would require 3X margin. On April 30th my margin exactly doubled on my SSO short position. April 29 VIX was sub 20 wasn't it?

 

Yea I forgot about those rules on Monday when I was trading 2x and 3x etfs. Traded well out of my margin range which gave me my first DT margin call!!!!!