Pattern Day Trader (PDT)

TL;DR: The Pattern Day Trader rule restricts accounts under $25,000 from making more than 3 day trades in a rolling 5-business-day window.

The Pattern Day Trader (PDT) rule is a FINRA regulation that applies to margin accounts. A day trade occurs when you open and close the same position within the same trading day. For options, this means buying a call and selling that same call on the same day counts as one day trade. If you execute 4 or more day trades within any rolling 5-business-day period, your account is flagged as a pattern day trader and must maintain a minimum equity of $25,000. If your balance drops below that threshold, your account is restricted to closing trades only until you deposit enough to meet the requirement.

Options traders need to be especially aware of the PDT rule because multi-leg strategies can trigger it in unexpected ways. Closing one leg of a bull call spread on the same day you opened it counts as a day trade, even if you intended to hold the position longer. Spreads assigned or exercised on the same day they were opened can also count. The rule applies per account, not per strategy, so three day trades across different tickers still count toward the same 5-day limit.

Several strategies help you stay productive while avoiding PDT restrictions. Swing trading options with longer DTE (holding overnight) does not trigger day trade counts. The Poor Man's Covered Call (PMCC) and other multi-leg strategies that you hold for days or weeks are naturally PDT-safe. Cash accounts (non-margin) are exempt from PDT rules entirely, though they require settled funds for each trade. Explore LeanOptions for strategies designed to work well with smaller accounts and limited day trades.