The pattern daytrading regulations were created by NASD last year, and approved by the SEC. These rules restrict the ability of smaller accounts to freely trade in the securities markets. The rules require minimum marginable equity of $25,000 in an account to freely trade stocks, and now stock options also. An account with less than $25,000 marginable equity is prohibited from closing a position on the same day it is opened more than three times total within any consecutive five trading days. The size of the trade doesn't matter. Three $50 daytrades will result in the same restrictions as three $20,000 daytrades. The rules have recently been applied to the "long" purchase and sale of non-marginable stock options. The purchase of stock options deducts from the margin value of an account, since they are non-marginable. Thus an account with more than $25,000 may find itself subjected to the "pattern daytrading" restrictions if it purchases enough options to bring the marginable equity value of the account below $25,000.