About Day Trading Margin Calls
A Day Trading (DT) margin call is issued when a customer exceeds his starting day trading buying power when engaging in day trading activities. Day trading buying power is defined as the equity in a customer’s margin account at the close of the previous business day, less any maintenance margin requirements. If a Pattern Day Trader (PDT) account receives a day trading margin call, the account will be on aggregation status until the call is met, or until 90 days from the due date of the call lapses.
Starting Day trading buying power can never increase intraday.
A customer has an overnight position in long options with a market value of $5,000, and maintenance excess (day trading buying power) of $3,000.
Trade 1 (9:30 AM)- STC overnight position for $5,000 (Option BP rises to $8,000)
Trade 2 (10:00 AM)- BTO 20 QQQ Jan 50 calls, spending $7,500
Trade 3 (11:00 AM)- STC 20 QQQ Jan 50 calls
In this case the customer day traded $7,500 (day trade charges are based on the opening trade requirements). This exceeded his starting day trading buying power of $3,000 by $4,500. A DT call would be issued for $4,500.
Note: Customers may use proceeds from closing overnight positions to make new transactions, but any positions opened which exceed the starting day trading buying power must be held overnight, or a day trading margin call will be generated.