My account's been labeled as “day trader” and I got a big margin call. What should I do? What trades can I place in the blocked period?
The SEC considers a day trade to be any trade that is opened and closed within the same trading day, and considers a day trader to be any trader that completes 4 or more day trades within 5 business days. If so they would label you day trader and in the US you are required to have at least $25K in your account. Maybe that's why they require you to add more money to your account? See more at Day trading restriction on US stocks and Wikipedia - Pattern day trader. "I assume that whatever you're holding has lost a considerable amount of its value then? What sort of instrument are we talking about? If the margin call is 14k on something you borrowed against the 6900 you're a bit more leveraged than ""just"" another 100%. The trading company you're using should be able to tell you exactly what happens if you can't cover the margin call, but my hunch is that selling and taking the cash out ceased to be an option roughly at the time they issued the margin call. Being labelled as a day trader or not most likely did not have anything to do with that margin call - they're normally issued when one or more of your leveraged trades tank and you don't have enough money in the account to cover the shortfall. Not trying to sound patronising but the fact that you needed to ask this question suggests to me that you shouldn't have traded with borrowed money in the first place." You need to contact the trading company and ask them what's going on. If it's simply a matter of needing to add more cash because you are now classified as a day trader, then call them, ask them what you need to do to not be considered a day trader, and do that. It would likely consist of not trading for a week and then trading less than you were going forward to avoid getting classified as a day trader again.  That would be the easy problem to solve, so I hope that's right.
The spread is two trades, one of which opens up some risk one of which limits/cancels the risk.  There is nothing stopping you from selling part of the spread opening the door to the risk.  You're required to have a margin account to open risky positions, even if the specific spread trade you're attempting to open has a risk limiting/cancelling counterpart. "Yes.  I heard back from a couple brokerages that gave detailed responses. Specifically: In a Margin account, there are no SEC trade settlement rules, which means there is no risk of any free ride violations. The SEC has a FAQ page on free-riding, which states that it applies specifically to cash accounts. This led me to dig up the text on Regulation T which gives the ""free-riding"" rule in §220.8(c), which is titled ""90 day freeze"". §220.8 is the section on cash accounts. Nothing in the sections on margin accounts mentions such a settlement restriction. From the Wikipedia page on Free Riding, the margin agreement implicitly covers settlement. ""Buying Power"" doesn't seem to be a Regulation T thing, but it's something that the brokerages that I've seen use to state how much purchasing power a client has. Given the response from the brokerage, above, and my reading of Regulation T and the relevant Wikipedia page, proceeds from the sale of any security in a margin account are available immediately for reinvestment. Settlement is covered implicitly by margin; i.e. it doesn't detract from buying power. Additionally, I have personally been making these types of trades over the last year. In a sub-$25K margin account, proceeds are immediately available. The only thing I still have to look out for is running into the day-trading rules." It's about how volatile the instrument is. Brokers are concerned not about you but about potential lawsuits stemming from their perceived inadequate risk management - letting you trade extremely volatile stocks with high leverage.  On top of that they run the risk of losing money in scenarios where a trader shorts a stock with all of the funds, the company rises 100% or more by the next day, in which case the trader owes money to the broker. If you look in detail you'll see that many of the companies with high margin requirements are extremely volatile pharmaceutical companies which depend heavily of FDA approvals. "If you own a stake large enough to do that, you became regulated - under Section 13(d) of the 1934 Act and Regulation (in case of US stock) and you became regulated. Restricting you from ""shocking"" market. Another thing is that your broker will probably not allow you to execute order like that - directed MKT order for such volume. And market is deeper than anyone could measure - darkpools and HFTs passively waiting for opportunities like that." To Chris' comment, find out if the assignment commission is the same as the commission for an executed trade. If that does affect the profit, just let it expire.  I've had spreads (buy a call, sell a higher strike call, same dates) so deep in the money, I just made sense to let both exercise at expiration. Don't panic if all legs ofthe trade don't show until Sunday or even Monday morning. Brokerage firms must settle funds promptly, but there's no explicit definition for this in U.S. federal law. See for example, this article on settling trades in three days. Wikipedia also has a good write-up on T+3. It is common practice, however. It takes approximately three days for the funds to be available to me, in my Canadian brokerage account. That said, the software itself prevents me from using funds which are not available, and I'm rather surprised yours does not. You want to be careful not to be labelled a pattern day trader, if that is not your intention. Others can better fill you in on the consequences of this. I believe it will not apply to you unless you are using a margin account. All but certainly, the terms of service that you agreed to with this brokerage will specify the conditions under which they can lock you out of your account, and when they can charge interest. If they are selling your stock at times you have not authorised (via explicit instruction or via a stop-loss order), you should file a complaint with the S.E.C. and with sufficient documentation. You will need to ensure your cancel-stop-loss order actually went through, though, and the stock was sold anyway. It could simply be that it takes a full business day to cancel such an order. "I think to some extent you may be confusing the terms margin and leverage. From Investopedia Two concepts that are important to traders are margin and leverage. Margin is a loan extended by your broker that allows you to leverage the funds and securities in your account to enter larger trades. In order to use margin, you must open and be approved for a margin account. The loan is collateralized by the securities and cash in your margin account. The borrowed money doesn't come free, however; it has to be paid back with interest. If you are a day trader or scalper this may not be a concern; but if you are a swing trader, you can expect to pay between 5 and 10% interest on the borrowed money, or margin. Going hand-in-hand with margin is leverage; you use margin to create leverage. Leverage is the increased buying power that is available to margin account holders.  Essentially, leverage allows you to pay less than full price for a trade, giving you the ability to enter larger positions than would be possible with your account funds alone. Leverage is expressed as a ratio. A 2:1 leverage, for example, means that you would be able to hold a position that is twice the value of your trading account. If you had $25,000 in your trading account with 2:1 leverage, you would be able to purchase $50,000 worth of stock. Margin refers to essentially buying with borrowed money.  This must be paid back, with interest.  You also may have a ""margin call"" forcing you to liquidate assets if you go beyond your margin limits. Leverage can be achieved in a number of ways when investing, one of which is investing with a margin account." Firstly, you haven't traded long enough. Secondly, you have just had a lot of luck that most of your trades came back. Thirdly, you should develop a trading strategy having entry rules, exit rules and risk management rules (never trade on margin without risk management or stop losses). Lastly, never trade on intuition or your emotions, stick to your plan, cut your losses small and early, and let your profits run. You can't sell options if you don't have margin account (except covered call).  You can't trade futures if you don't have margin account.  Everything is immediate when you have margin account. (Including stocks) Margin account is not subject to freeriding rules, but is subject to Pattern Day Trader rules. "This doesn't make sense to me. Writing a covered call gives him a long delta position - the exact opposite of what he wants. And the tax losses won't turn a losing position into a winning one.  Is there something I'm missing?  Edit: Also, doesn't ""shorting against the box"" mean he has to have a long position, and short against that? That means you've got zero net delta, which isn't very useful at all..." You can execute block trades on the options market and get exercised for shares to create a very large position in Energy Transfer Partners LP without moving the stock market. You can then place limit sell orders, after selling directly into the market and keep an overhang of low priced shares (the technical analysis traders won't know what you specifically are doing, and will call this 'resistance'). If you hit nice even numbers (multiples of 5, multiples of 10) with your sell orders, you can exacerbate selling as many market participants will have their own stop loss orders at those numbers, causing other people to sell at lower and lower prices automatically, and simultaneously keep your massive ask in effect. If your position is bigger than the demand then you can keep a stock lower. The secondary market doesn't inherently affect a company in any way. But many companies have borrowed against the price of their shares, and if you get the share price low enough they can get suddenly margin called and be unable to service their existing debt. You will also lose a lot of money doing this, so you can also buy puts along the way or attempt to execute a collar to lower your own losses. The collar strategy is nice because it is unlikely that other traders and analysts will notice what you are doing, since there are calls, puts and share orders involved in creating it. One person may notice the block trade for the calls initially, but nobody will notice it is part of a larger strategy with multiple legs. With the share position, you may also be able to vote on some things, but that solely depends on the conditions of the shares. What bank, and is there restrictions on the trades? (i.e. they only go through once a week?)  I do light medium term trading - maybe 5-10 trades per quarter - and would love to be able to cut out the fees. "Scenario 1 - When you sell the shares in a margin account, you will see your buying power go up, but your ""amount available to withdraw"" stays the same until settlement. Yes, you can reallocate the same day, no need to wait until settlement. There is no margin interest for this scenario.  Scenario 2 -  If that stock is marginable to 50%, and all you have is $10,000 in that stock, you can buy another $10,000. Once done, you are at 50% margin, exactly." "The margin rules are also more complicated.  A simple buy on a non-margin account will never run into margin rules and you can just wait out any dips if you have confidence the stock will recover.  A ""simple"" short sell might get you a call from your broker that you have a margin call, and you can't wait it out without putting more money in.  Personally I have trouble keeping the short sale margin rules straight in my head, at least compared to a long sale. I got in way over my head shorting AMZN once, and lost a lot of money because I thought it was overvalued at the time, but it just kept going up and I wanted it to go down.   I've never gotten stuck like that on a long position." You should watch Margin Call and follow Demi Moore's lead.  Do you figure out what derivatives to buy or just calculate how much exposure the firm has and tell someone else?   Can you potentially go to jail because of your job or is losing your job the worst that can happen?