here's another paragraph from the NASD FAQ's Does this rule apply only if I use leverage? No, the rule applies to all day trades, whether you use leverage (margin) or not. For example, many options contacts require that you pay for the option in full, that is at 100%. As such, there is no leverage used to purchase the options. Nonetheless, if you engage in numerous options transactions during the day you are still subject to intra-day risk. You may not be able to realize the profit on the transaction that you had hoped for and may indeed incur substantial loss due to a pattern of day-trading options. Again, the day trading margin rule is designed to require that funds be in the account where the trading and risk is occurring
No need to sue the SEC. Just get the rule changed: www.sec.gov/rules/petitions.shtml Yes, the rule was made under Harvey Pitt. Now that he's leaving, this may be the perfect opportunity to get going on changing it.
Great idea! You certainly have my signature on such a petition. Let's get it started. Please help. Thank you.
The SEC says they are trying to protect the individual investors.....BULL$HIT. I think there are many times when people refrain from selling because they don't want to get caught with a PDT classification. Your decision to enter or exit a trade should not be dependent on some made up rule. Its your money, you want to trade it and put it in the markets, it should be your decision on theirs. THEN WHAT THE HELL IS THIS CRAP ABOUT GIVING YOUR MORE BUYING POWER, 4 TO 1??????????? What they are doing is giving you more rope to hang yourself with. So that people blow themselves up in the market. Todays market is volatile. If you enter into a position and hit drops, you should have the opportunity to sell as you please without having to worry about being restricted. ITS DISCRIMINATORY. Daytrading should be for anyone who wants to do it. Its not only for the rich. I for one am not affected by this stupid ass rule but I will be writing to those e-mail addresses noted on the first post. I ENCOURAGE EVERYONE TO DO THE SAME. WE NEED MORE PEOPLE BITCHIN' AND COMPLAINING AND PROVING TO THEM THAT THIS IS A HAZARDOUS RULE FOR INVESTORS/TRADERS. here please take this 4 to 1 buying power and go for it man, make your millions............... SOB's
www.nasdr.com/pdf-text/0126ntm.txt From the amendments section about 3/5 of the way down: "The term 'day-trading' means the purchasing and selling (or the selling and purchasing) of the same security on the same day (in a margin account . . . )" By this excerpt I make the presumption that daytrading options from a cash account is not prohibited by this regulation.
It doesn't even seem to be the kind of petition that needs a list of signatures. But thanks for offering! Start out by writing to them (if you haven't already), just letting them get some volume of feedback to start off. That way, by the time we do get around to filling out the petition, they will already have a sense that a lot of people are against the daytrading rules. "Rule 192. Rulemaking: Issuance, Amendment and Repeal of Rules of General Application. (a) By Petition. Any person desiring the issuance, amendment or repeal of a rule of general application may file a petition therefor with the Secretary. Such petition shall include a statement setting forth the text or the substance of any proposed rule or amendment desired or specifying the rule the repeal of which is desired, and stating the nature of his or her interest and his or her reasons for seeking the issuance, amendment or repeal of the rule. The Secretary shall acknowledge, in writing, receipt of the petition and refer it to the appropriate division or office for consideration and recommendation. Such recommendations shall be transmitted with the petition to the Commission for such action as the Commission deems appropriate. The Secretary shall notify the petitioner of the action taken by the Commission."
<quote>ITS DISCRIMINATORY</quote> Cannot agree more. The PDT margin rules wrongly restrict the fundamental right for everyone to be able to trade equally and freely. Margin is an issue, while number of day trades is another. We need to be able to exit on the same day, and reenter the market the same day, whenever we have cash to back up the settlement of transaction.
This stuff about "risk" is cute: Nonetheless, if you engage in numerous options transactions during the day you are still subject to intra-day risk. You may not be able to realize the profit on the transaction that you had hoped for and may indeed incur substantial loss due to a pattern of day-trading options. Again, the day trading margin rule is designed to require that funds be in the account where the trading and risk is occurring. "My mummy won't let me cross the street, because she says it's dangerous! I could get hit by a car!" Ooh, there's risk in the market. But if I make three trades, no matter how small, they will slap a restriction on me. If you make three purchases of three different $.20 options, totalling $60, you're a Pattern Daytrader. Even if there's $20,000 in your account. Of which you just risked $60. Ridiculous. But if you buy 50 $3.00 contracts, and hold them overnight, risking $15,000, that doesn't alarm them as being risky enough to fall under restrictions.
The question of risk, like the little child not allowed to cross the street, should have more to do with the size of the street and the amount of traffic, not how many times you may cross it. They limit you to three street crossings, no matter how slow the street is. But they'll allow you to cross the 5 lane highway as long as you don't cross more than three times.
Everything about this is ass-backwards. It's incredible. They claim to be concerned about limiting risk. But they're most severely limiting the thing that is the least risky (trading options purchased with cash) while increasing the thing that really is risky (margin).