About Cash Accounts


Cash accounts require that all purchases be paid in full. In cash accounts, customer purchases must be fully paid for on or before settlement date.

Settlement Period is the period of time between the trade date and the settlement date. Trade date is the date when the transaction (buy/sell) occurs. Settlement date is the date when the payment is made and the transfer of the securities’ ownership occurs. The buyer must make payment within the settlement period, while the seller must deliver the purchased security within this period. Settlement on a stock trade is trade date plus three business days (T + 3). Settlement on an option trade is trade date plus one business day (T + 1).

Banking Holidays are non-settlement days. It is important for cash account owners to recognize that Columbus Day and Veterans Day are non-settlement banking holidays where the securities markets are open. You can trade on these days, but these days are not included in the settlement period. This may affect the potential for being issued a Good Faith (GF) Violation.

Columbus Day 2013: Monday October 14

Veteran’s Day 2013: Monday November 11

In a cash account, selling stock short and selling uncovered options are not permitted. However, cash accounts are permitted to sell cash secured puts. Trading option spread strategies on equity options are also not permitted in cash accounts, with the exception of IRAs that have a Complex Options Agreement.

Note: an IRA opened prior to July 10, 2013 requires the account holder to complete and sign a Complex Options Agreement in order to trade option spread strategies.