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Strategies & Market Trends : Momentum Daytrading - Tricks of the Trade
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To: Wayners who wrote (2058)2/12/2000 4:06:00 PM
From: Dan Duchardt   of 2120
 
Wayne,

I guess that means no covered calls or covered puts either for that matter.

I don't think covered calls will be affected. They are allowed in cash accounts. You really aren't borrowing anything when you write a covered call, just contracting to sell your long positon at a certain price up to a fixed date. A covered put implies a short stock position, and is not allowed in cash accounts. A few (not many) enlightened brokers will let you sell naked puts as long as you have cash in the account to buy the stock if the put is exercised, since that is virtually equivalent to a CC.

I did not know about that NYSE rule 431 either. I assume Nasdaq allows day trading in a cash account.

I wouldn't assume that, but I wish it were true.

investor.nasd.com

Day-trades should occur only in margin accounts. Day-trading in a cash account may amount to free riding (i.e., purchasing a security and then selling it without having paid for the purchase).

Dan
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