Spreads

Spreads must be opened and closed  as a spread to qualify for spread treatment when day trading. Opening a spread, and closing the legs individually, will change the day trade requirements.

Example #1:

Trade 1 (9:00 AM)- BTO 10 QQQ Feb 60 calls $2.30/STO 10 QQQ Feb 55 calls $3.75 ($1.45 credit).
Trade 2 (10:15 AM)- STC 10 QQQ Feb 60 calls/BTC 10 QQQ Feb 55 calls.

As this credit spread was both entered into, and closed, contemporaneously, the day trade requirement is the difference between the strike times the volume, less the credit taken in, or $3,550.

(($60 – $55) – $1.45) * (10 * 100) = $3,550

Contrast this requirement with the day trade charge for closing the spread individually:

Example #2:

Trade 1 (9:00 AM)- BTO 10 QQQ Feb 60 calls $2.30/STO 10 QQQ Feb 55 calls $3.75 ($1.45 credit).
Trade 2 (10:15 AM)- BTC 10 QQQ Feb 55 calls
Trade 3 (11:00 AM)- STC 10 QQQ Feb 60 calls

The day trade requirement for this trade will be the premium of both the long side and the short side added together. In this case the day trade charge will be $2,300 + $3,750 = $6,050.

Example #3:

Condor
Trade 1 (10:00 AM)- BTO 10 ZZZ Jan 150 calls $1.50/STO 10 ZZZ Jan 140 calls $6.50 /BTO 10 ZZZ Jan 120 puts $0.75/STO 10 ZZZ Jan 130 puts $2.25. ($6.50 credit)
Trade 2 (2:30 PM)- Close the condor in one spread order.

Because the condor was entered into, and closed, contemporaneously, the requirement for this trade is identical to exchange requirements, which is $3,350.

However, note the difference if the trade is closed with two separate orders.

Trade 1 (10:00 AM)- BTO 10 ZZZ Jan 150 calls $1.50/STO 10 ZZZ Jan 140 calls $6.50 /BTO 10 ZZZ Jan 120 puts $0.75/STO 10 ZZZ Jan 130 puts $2.25. ($6.50 credit)
Trade 2 (12:00 PM)- STC 10 ZZZ Jan 150 calls/BTC 10 ZZ Jan 140 calls.
Trade 3 (2:00 PM)- STC 10 ZZZ Jan 120 puts/BTC 10 ZZZ Jan 130 puts

In this case both sides of the condor will have a day trade requirement. The day trade charge in this case is $5,000 for the call side, and $8,500 for the put side, or a total of $13,500.

Note: Butterflys and other multi-leg orders are treated in the same manner.