Did you receive a day trade call and are wondering what exactly caused this? Well, you're in the right place. Continue reading to learn more about:
What Causes a DT Call?
A day trade call (DT) is generated when a margin account exceed its starting day trade buying power (SDTBP). You can view your starting day trade buying power by logging into your tastyworks desktop platform or by logging into your account at tastyworks.com.
SDTBP is calculated by taking your account's margin equity minus the margin requirement of all your positions, or just your Options Buying Power at the close of business the previous trading day.
Once you log in to your platform please expand the accounts drop down menu located along the top right corner. When you see your account(s) you will see a blue balances drop down located immediately to the right of your account number. The instructions are illustrated in the screenshot below.
tastyworks.com Account Management
Please log in to your account by visiting tastyworks.com, or by clicking here. Once logged in, please follow the instructions in the screenshot below.
The most common way day trade (DT) calls occur is when an account holds a position(s) overnight, closes the overnight position(s), and then uses the newly released buying power to day trade. While the new buying power can be used for new overnight positions, it cannot be used for day trading.
What is due?
If there are not any open past-due day trade calls on the account, new day trade calls are typically due 5 business days after the trade date (T+5). If there are any open past-due day trade calls on the account, new day trade calls are due 1 business day after the trade date (T+1).
When an account doesn’t have any day trade (DT) calls, they can re-use their starting day trade buying power throughout the day. For example, an account with $5,000 in SDTBP could place the following trades:
- Buy $4,800 worth of calls.
- Sell the calls.
- Buy $4,000 worth of puts.
- Sell the puts.
Because the day traded positions were not open at the same time, only the largest day trade would be considered. Since $4,800 is <= the SDTBP, no DT call would be issued.
However, if an account has 1 or more open DT Calls, subsequent day trade calls will be calculated by adding the day trade requirements of ALL day trades. For example, the day trades from the example above would require $8,800 in SDTBP. So if the account only had $5,000 in SDTBP, the account would receive another day trade call.
Additionally, if an account has 1 or more open DT Calls, the minimum day trade requirement for equities will be raised to 50%. If an account has 1 or more open past due DT Calls, the minimum day trade requirement for equities will be raised to 100%.
If 2 or more DT calls go past due without being met, a “closing-only” restriction is applied to the account for 90 calendar days. The restriction can only be removed by meeting the combined total of all unmet DT calls.
How to Meet
Typically, a DT call must be met by depositing new funds in the amount of the call(s) or greater. Funds deposited to meet a DT call must remain in the account for two full business days before being withdrawn. If a DT call is not met, it will fall off the account 90 days after the due date.
- Any funds withdrawn from an account while there is an open DT call will be added to the amount of the call. For example, if you received a DT call for $3,000 and withdrew $4,000 from your account while the call was open, you would need to deposit $7,000 to meet the call.
- If there is more than 1 open DT call on an account but none are past due, funds deposited can be applied to both calls. For example, if there is one open DT call for $1,500 and a second open DT call on the account for $3,200 (and neither is past due), then a deposit of $3,200 can meet both DT calls.
- If there is more than 1 open DT call on an account and any of them are past due, the calls must be met separately. For example, if there is one open DT call for $1,500 and a second open DT call on the account for $3,200 (and both are past due), then a deposit of $4,700 is required to meet both DT calls.
- If only 1 DT call is past due, then you can meet the smaller one to avoid the “closing positions only” restriction caused by multiple DT calls.
- If 2 or more DT calls are past due, then you must meet the total of all of them to remove the “closing positions only” restriction.
Meeting via Liquidation
Per FINRA Rule 4210, an account may liquidate securities to satisfy a day trade (DT) call, but only the maintenance margin requirement of the liquidated securities will be released. However, FINRA discourages such practice and requires monitoring to ensure this form of meeting day trade calls is not misused or overused.
- DT calls can be met via liquidation up to 3 times in a rolling 12 month period.
- In order to meet a DT call via liquidation, you must have open positions after the DT call is issued that will generate enough maintenance margin relief to fully meet the DT call. This means that the liquidation that created the day trade cannot be applied.
- Only the maintenance margin relief of liquidations can be applied to the DT Call.
- All liquidations that are designated toward meeting a DT call must happen in the same day and the DT call must be met by the end of that day.
- The tastyworks margin team must be informed (email@example.com) of a liquidation that is intended to meet a DT call before noon (Chicago time) on the day of the liquidation(s).