Defeating PDT Rule
By Ernie Varitimos
May 11, 2022
0:00 / 23:33
Defeating PDT Rule

Hey, everybody out there in zero dash DTE land. My name's Jay I'm a member on the site. And although I haven't been a member too long, I'm actually pretty new. I've noticed several comments in the discord and Ernie even address this in a podcast that he did, there's been a lot of discussion around this idea of the pattern day trade rule, PDT, the evils of.

FINRA laws. However, there is a way if you have a small account and if you are been road restricted, PDT, restricted, there are some ways around that. I thought I'd put together a little presentation to show the mechanics of how this actually works. Ernie did a very good podcast explaining the ways it can be done.

Some other members in the discord have explained it, but sometimes some terms get thrown around and I thought maybe this might help clarify it for some people, because there still seems to be quite a bit of confusion and some questions surrounding how to actually execute this to exit a position.

If you have a small account in the SPX and not violate the PDT rules. So what I'm going to do is I'm going to, I'm an I use Thinkorswim, I don't know for certain how this would work. If you are on tasty works or IB or any other platform that might be out there, you may just have to do some experimenting on your.

But this is a, I'm going to use thinkers, women. I'm going to use their on-demand feature up here, which frankly is not very good for much else. But in this case, it's, I think it will be pretty good for showing how you can actually get in and out of this stuff and the mechanics of what it takes, like literally point and click around the platform to get it done.

So here we are, I've just entered this position into the platform. You can see, I've got to put butterfly on the markets up here at 44 85. My assumption is it's going to go down closer to 4,400 today. So what I've done is, this is your standard run of the mill. Put butterfly that Ernie's method lives and dies by mostly lives.

So I've sold 2 4400 putts. I've bought 1 43 75 put, and I've bought 1 44, 25 foot, which you can see on here. There's my position. Boom, boom, boom. And if I go up to the monitor tab, I can see that my position, my, my fill, which again, in the, in this system is pretty God awful or unrealistic.

I shouldn't say awful. They're actually a pretty awesome if you're paper trading. So I bought it for 95. Okay. Now what I'm going to do is I'm going to roll the clock forward, and then we can see how we get out of this bad boy, because like a lot of people, I do have a small account. I am PDT restricted, so I can only, I've only got three bullets to fire.

Any one, given period, come on, here we go. Roll this forward towards the end of the day.

And the market's pretty busy today. So even the on-demand is going a little slow. The single biggest issue that can come up with trying to use this method is that you got to, you have to have a symmetrical system. And actually it's the reason why it works so well with Ernie system, because. 99.999% of what we do with this method is using symmetrical butterflies.