13h large trader designation my broker sent me email that i possibly need to file this

dave_s said:
Here is a reply that I sent when they tried this twice on me.

I do not believe that my account is anywhere near the requirement for Large Trader
Classification.

The requirement of 2 million shares a day or 20 million shares a month translates into
20,000 contracts a day of 200,000 contracts a month for normal 100 lot option contracts.

My account came nowhere near either of these two levels.

The dollar volume of $20,000,000 per day or $200,000,000 is grossly above my trading
level. If you look at the calculation of trading volume in SEC document 34-64976, you will
see that INDEX OPTION trading values is based on the market price of the transaction,
(see note 64 on page 28 of the attached document). This is different than the treatment of
equity options which are based on the value of the underlying security at option exercise,
as described in the SEC Frequently Asked Questions at:

<http://www.sec.gov/divisions/marketreg/large-trader-faqs.htm>

in Question 1.3 response. Thus, my account would have had to have index option trades
with actual execution dollar values of $20,000,000 der day or $200,000,000 per month.

In actuality, there is no volume requirement / limit for index options. Index options volumes
are NOT included in Large Trader identification at any level per the SEC document, only the dollar value of the
actual market price transaction of the option, NOT the underlying.
More...


DAVE. thanks for the reply.. so if u see my OP.... all i did was buy 3 cent SPY OTM options which were expiring the same day . and I closed them before EOD...
so since it was SPY -do you think my 1000 round trip trades make me a Large Trader?
Also, i dont think I will go over 1000 contracts round trip .-in a day. again.. because of this hassle.
i cud have easily spread the trade over 2 days instead..
 
Darwin, SPY is not an index and the calls you bought are not index options as described in Dave's response to his broker or in the SEC 13-H FAQ. SPY is the SPDR S&P 500 ETF Trust that tracks the S&P500. To purchase calls on the S&P index, you'd need to buy calls on SPX.
 
As options on ETF's are treated the same as options on equities, you multiply the number of contracts x the contract multiplier x the price of the underlying. So, 1000 SPY calls would be 1000 x 100 x ~$210.85 = $21,085,000.
 
darwin666 said:
DAVE. thanks for the reply.. so if u see my OP.... all i did was buy 3 cent SPY OTM options which were expiring the same day . and I closed them before EOD...
so since it was SPY -do you think my 1000 round trip trades make me a Large Trader?
Also, i dont think I will go over 1000 contracts round trip .-in a day. again.. because of this hassle.
i cud have easily spread the trade over 2 days instead..
More...


The best advice that I can offer is to go through the SEC rules and see how they apply to your specific situation. It may take a little time, but I think it might be worth the investment of effort.
 
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