Options Day Trading

Discussion in 'Trading' started by TradingBillions, Feb 28, 2007.

  1. Hi, is it possible to day trade options with an account around $8,000? Or do the same day limit rules apply?

    Also, why do option accounts require margin if you are paying for the options with your actual equity?
  2. Not an answer, more like one more question on this topic from me. :)

    What kinds of trading methods and setups can be used by retail traders to daytrade options?

    I don't trade options much and never even thought that someone does it intraday, so just curious...
  3. blast19


    Options don't even count towards your account's value regarding the daytrade rule. Therefore, if you have $8k worth of contracts they will not count towards the day trade minimum equity of $25k.
  4. I believe the spreads and commissions and small deltas of options make daytrading them quite difficult. If you want to trade an intraday swing in the stock, the stock is still the best bet.
  5. spinn


    The pattern daytrading rules apply to options as well.

    You can get around that by trading single stock futures, you should have enough margin to do that.
  6. optioncoach:

    Can't you daytrade using synthetic longs & shorts ATM using one of the penny spread issues, like IWM. Or even use DITM to get 1 delta on each option to get twice the underlying price movement...theoretically.
  7. You can certainly flip using the synthetic long or shorts but you have to be aware that you have 2 b/a spreads to overcome getting in and out on the call and the put. For significant intraday moves you can certainly get some leverage but if the stock moves $0.40, the value of the synthetic long or short will not necessarily move $0.40 due to that slippage. How much is hard to say theoretically so I advise putting on one paper when you would want to get in intraday and see how much it moves along with the stock.

    Deep ITM options do have high deltas but often wide b/a spreads which is the main problem I see with daytrading options. Swing trading for a few days or a week on significant moves works but intraday is a little more difficult. Doable but watch the slippage in getting in and out.
  8. Besides having to overcome the commissions and bid/ask spread with options, you'll have to deal with the "greeks" too. Get more money into your account, expand your time horizon and/or consider foreign exchange trading instead.
  9. Hi volume In-the-money options that are very near their expiration dates are day tradable.