FINRA rules define a “day trade” as the purchasing and selling or the selling and purchasing of the same security on the same day in a margin account. This definition encompasses any security, including options. Selling short and purchasing to cover a position in the same security on the same day is also considered a day trade.
Exceptions to this definition include:
- a long security position held overnight and sold the next day prior to any new purchase of the same security; or
- a short security position held overnight and purchased the next day prior to any new sale of the same security.
For more information on day trading and the related FINRA margin rules, please read the SEC staff’s investor bulletin “Margin Rules for Day Trading.”