your day trading buying power does not increase from what you started the day with. if you sell a position you held overnight those funds can be used for a trade, just not a day trade. day trading buying power is based on your maintenance excess from day before's close. options can't be margined and if you hold options overnight they contribute nothing to your day trading buying power the next day.
Got it, that makes perfect sense. So when I am using the buying power, take the following example. I have 50k cash in the account at the start of the day, so 50k options buying power, 200k daytrading limit. I buy 50k worth of calls, buying power goes to 0, daytrading limit goes to 150k. I sell for 50k, buying power goes back to 50k. I buy another 50k worth of calls, buying power goes to 0, daytrading limit goes to 100k, at this point am I using margin since options don't settle until the next day?
if you start with $50K in cash you have $50K for options trading, $100K for overnight trading and $200K for equity day trades. If you bought $50K worth of calls, you should have 0 BP across the board since options are not marginable. you sell the calls you bought and your day trading buying power goes back to $200K. With $50K in cash at start of the day you basically have $50K in options day trading bp and $200K in stock day trading bp. as long as you don't exceed what you started the day with and you don't have a previous unmet day trading margin call you can use your day trading BP over and over again throughout the day. You can repeatdely buy and sell $50K worth of calls or puts. but if you make a profit, those funds can't be daytraded on. so for example, buy $50K worth of calls, sell the calls an hour later and bring in $55K, your option day trading buying power is back to the $50k you started with. If you were to buy $55K worth of calls and then sell them same day you'd get hit with a $5K day trading margin call.