I have a smaller balance with Ameritrade and even though Thinkorswim said I was in the clear to make one more same day trade, I somehow got flagged with day-trading while under a $25,000 balance (for this particular broker). I didn't realize that day-trading an option would trigger this, but I fucked up apparently. If I e-mail them that this was a one-time mistake, will they remove the flag from my account? My biggest concern is not meeting the margin call and then getting flagged with other brokers because of this. Otherwise, my account is currently in the black with no other problems. Why is this even a regulation?
You were flagged as a pattern day trader with under $25k. You need to get over $25k or your account will be restricted for what I think is 90 days. When your account is under $25k, at some point there was a warning, but it is the traders job to know this.
Well that sucks but that is my fault. My bad. Shit. "John cancel your college plans this semester. Dad just got a margin call even though I wasn't using it." Getting punished for helping to provide some liquidity in the markets. Sigh.
Don't email, call the margins department. Throw yourself on the mercy of the court. If you ask real nice, they may reset you, this one time, so you will be ok. FYI, if you execute a credit spread in the morning, then "adjust" it during the day, that will be a PDT violation. Be nice to them and they will likely reciprocate.
It just means you cannot day trade multiple rounds on stocks unless you get the balance back up to $25,000. You are not being punished globally or being black balled across the industry. They just have a minimum account balance for day trading stocks. Many people I know have small accounts there and day trade futures all day long.
It is a FINRA Regulation. http://www.finra.org/investors/day-trading-margin-requirements-know-rules The only way out it would be if TD were to agree to cancel the trades.
Realistically though, on that account, if you are getting a PDT margin call for 21.5K, then your netliq on that account is probably only about 3500'ish, right? Big deal. Wire the money out if it matters to you, or if you have the funds elsewhere, wire enough in so that you meet the margin call. Consolidate your brokerage account(s) such that you have well above 25k in one account if you are going to be opening and closing the same positions in one day. If you don't have 25k of capital to be trading, then don't enter trades that you think you will want to close the same day. It's Reg T, and there is no discretion from your broker on the matter. They are just following the rules that the regulators require them to follow.
Once you fix this issue, research trading options in a cash account vs. margin account. Options settle differently than stock in a cash account.
In a cash account you cannot short options without the cash/underlying to cover, so you can only go long?
No. In a cash account you are not subject to the PDT rules of Regulation T. You can generally short options as long as your cash amount is enough to cover any potential assignment or max-loss.