Daytrading options

Quote from stock777:

Maybe I'm missing some great truth, but I rarely see where daytrading the option beats daytrading the stock itself. You just wind up paying the fat spread to the MM's,

There are some rare instances where the option is mispriced in front of spiking volitility in the stock, so if you're very fast, you might capture that.
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Here is the thing. You control your exact risk amount with options and take intraday even to intraday swing positions that you might not be able to sit through with stock. Some of these stocks get so dangerous even in a nice up/down trend that you have to go against your usual disciplined cutting of losses in order to stay in. Day trading only options, well if you are good with intraday swings and day to day moves is absolutely possible even though the spreads are a b*tch.
Trading options along stocks intraday is a great combination.
 
I realize that trading the option is less stressful, and less risky. But you also are rewarded much less for a move in the stock. You could achieve the same thing by trading a smaller position in the stock, with more control over execution.

Now, if you are buying very cheap out of the money options, and get a huge move in the stock in a short time, then it's a better play. Expecially if you are putting on some kind of volatility position, where you don't care what direction it moves.

My point is, that options per se, are not ALWAYS a good substitute for trading the stock.

Now go find those 5 cent Calls that are going to $10.
 
Quote from c_verm:

Every trader must have minimum $25K in their trading account if you want to place 4 or more daytrades in a 5 day period. For example you must have 25K if you want to day trade US stocks, US options, US ETF's, CANADIAN stocks & options ect..

Hope this helps:)
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Hey guys...I don't think you need to have $25K to daytrade options. Maybe it depends on your broker? I've been daytrading options for a while now with less than $5k.
 
Quote from JML845:

Hey guys...I don't think you need to have $25K to daytrade options. Maybe it depends on your broker? I've been daytrading options for a while now with less than $5k.
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The NYSE and NASD have imposed rules to limit small investor day trading. Customers who have made four or more securities day trades (open and close a stock or option position in a single day) within five business days are considered "Pattern Day Traders". Pattern Day Traders are required to hold a minimum of $25,000 in equity, and therefore those customers without this minimum equity and who have completed three day trades within five business days will not be allowed to enter another trade. This restriction will remain in effect until five business days from the first day trade have elapsed. Standard stock margin requirements will be applied unless a customer is deemed to be a Pattern Day Trader.

http://www.interactivebrokers.com/index.html?html/marginRequirements/stocks.html~top.body
 
IB is reg by NYSe which has a diff interp of the PDT rule vs. NASD firms. As long as u have $ for the premium which is then release the next day you shouldbe able to buy /sell options. At least that is what my ex-broker told me. Keep in mind that options settle next day which helps.

Talk to NASD correspndent brokers for better clarify.
 
Quote from Hittfeld:

Wrong, applies to options as well. Only futs won`t count
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Ok I went into my account and checked my trades for this week. I've made 7 trades in the last 5 days and my broker hasn't said anything. Are you sure the rule applies to options? My broker gave me the impression that I don't have to worry about how often I trade options but they did tell me I couldn't daytrade stocks.
 
Quote from JML845:

Ok I went into my account and checked my trades for this week. I've made 7 trades in the last 5 days and my broker hasn't said anything. Are you sure the rule applies to options? My broker gave me the impression that I don't have to worry about how often I trade options but they did tell me I couldn't daytrade stocks.
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The rule applies to both stocks and options. It was proposed by NYSE and NASD. It has nothing to do with Interactive Brokers. I cut and paste from their web site, because it is convenient. Unless your brokerage firm is not regulated by the above two entities, you do need to keep a minimum account value of $25,000 to daytrade options. Otherwise, NYSE and NASD may take actions against them.

NASD and NYSE can only regulate the actions of its member brokerage firms and their employees. However, it is my understanding that all U.S. brokerage firms have to be members of either NASD or NYSE to do business with the public.
 
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