So a little bit of context, I just recently opened a TD Ameritrade account, already moved to Schwab and I will start trading options via Thinkorswim. I have options and margin approval.
I have a few doubts regarding the text higlighted in yellow, any information helps.
-
By next business day that means at the start of the business day? What hour specifically? And how to double check if the trade has been settled (I am using thinkorswim)?
-
Lets say on day 9/5 I SELL a call spread, can I buy it back on the same day? or I need to first wait for the 'initial sell to open' trade to settle? And in case that I can in fact buy it back on the same day does that have any negative consequence for me such as a restriction?
-
Now instead on day 9/5 I BUY a call spread, can I sell it back on the same day? or I need to first wait for the 'initial buy to open' trade to settle? And in case that I can in fact sell it back on the same day does that have any negative consequence for me such as a restriction?
Sorry for all the question and thanks in advance!
A few doubts regarding Settlement of Trades
byu/Mysterious-Pentagon inoptions
Posted by Mysterious-Pentagon
1 Comment
1. If you are using a margin account, which most serious traders do, then you will not have to wait for any prior trades to settle. If you are using a cash account, it becomes more work for you to track which trades were closed and what cash has settled and can be used for the next trade. See this, but most everyone just gets a margin account which mitigates this issue – [Avoiding Cash Account Trading Violations – Fidelity](https://www.fidelity.com/learning-center/trading-investing/trading/avoiding-cash-trading-violations)
2. Day trading is opening and closing the same trade on the same market day. These are limited unless you have an account of $25K or more. If the limits are exceeded, then the account is marked as PDT and there can be restrictions. If you have $25K+ in the account, you can still be marked as PDT but will not be subject to restrictions. See this – [Day Trading | FINRA.org](https://www.finra.org/investors/investing/investment-products/stocks/day-trading)
3. Yes, this can be opened and closed but will be marked as a day trade.
Since you have margin approval you will not have much to be concerned with about trades settling. PDT is another story, and you don’t mention the size of the account.
I will tell you that most who day trade are not successful, but those who trade longer durations of even 10 to 30+ days can have very good success . . .