What is the 390 Professional Option Order Rule? (2024)

FAQs

What is the 390 Professional Option Order Rule? ›

The rule is based on the concept of placing an average of 390 option orders per trading day in a calendar month. If a trader meets or exceeds this threshold, they are classified as a "Professional" trader. This classification can affect the fees and data subscriptions that traders are subject to.

What does this magic number have to do with trading? If you are a trader who averages 390 option orders a day in a calendar month, you could classify as a professional trader. Effectively, placing a new order each minute of the trading day, hence the 390 in the rule's title.

What is the 390 Professional Orders Rule ("390 Rule")? If you average 390 option orders per day in any calendar month you may qualify as a professional trader. The "390 Rule" applies to all options orders sent to the broker for execution, not just filled orders.

An account which places 390 option orders per day on average for a calendar month is designated as a “professional customer.” This rule, adopted by the options exchanges, is designed to identify professional customers who compete with market makers that otherwise should not receive priority over retail clients' orders.

The 3–5–7 rule in trading is a risk management principle that suggests allocating a certain percentage of your trading capital to different trades based on their risk levels. Here's how it typically works: 3% Rule: This suggests risking no more than 3% of your trading capital on any single trade.

The rule is based on the concept of placing an average of 390 option orders per trading day in a calendar month. If a trader meets or exceeds this threshold, they are classified as a "Professional" trader. This classification can affect the fees and data subscriptions that traders are subject to.

Similar to trading equities, you must maintain a balance of $25k in your brokerage account in order to play more than three options day trades in a five-day period. Otherwise, you will be flagged as though you were buying or selling the same day with simple equities purchases.

Remember: your business wouldn't exist without your customers. Therefore, prioritizing their needs and expectations is a non-negotiable rule in the customer service playbook. Show your customers that they matter by delivering tailored services and solutions that address their specific needs.

Simply explained, the 10 and 5 Rule suggests that anytime a guest is within ten feet of a staff member, the staff member should make eye contact and warmly smile to acknowledge the oncoming guests.

Professional Customer means a customer who possesses the experience, knowledge and expertise to make its own financial decisions and to properly assess the risks it incurs.

What is the 11am rule in trading? ›

It is not a hard and fast rule, but rather a guideline that has been observed by many traders over the years. The logic behind this rule is that if the market has not reversed by 11 am EST, it is less likely to experience a significant trend reversal during the remainder of the trading day.

It is a high-stakes game where many are lured by the promise of quick riches but ultimately face harsh realities. One of the harsh realities of trading is the “Rule of 90,” which suggests that 90% of new traders lose 90% of their starting capital within 90 days of their first trade.

The Rule. If, after trading outside the Value Area, we then trade back into the Value Area (VA) and the market closes inside the VA in one of the 30 minute brackets then there is an 80% chance that the market will trade back to the other side of the VA.

First, pattern day traders must maintain minimum equity of $25,000 in their margin account on any day that the customer day trades. This required minimum equity, which can be a combination of cash and eligible securities, must be in your account prior to engaging in any day-trading activities.

The PDT rule requires that anyone who meets the definition of a pattern day trader must maintain an account balance of at least $25,000.

An exercise limit caps the number of option contracts in a single class that an entity can exercise within a given time period. Exercise limits seek to limit market manipulation and/or other unethical practices.

Essentially, if you have a $5,000 account, you can only make three-day trades in any rolling five-day period. Once your account value is above $25,000, the restriction no longer applies to you. You usually don't have to worry about violating this rule by mistake because your broker will notify you.