# Day Trading

### What is day trading?

Day trading is when you buy and sell a stock on the same trading day. Oftentimes, 'day traders' will execute multiple trades in a day and hold onto each position for only a short period of time.

### Is all options day trading 0DTE?

0DTE options expire the same day, so all 0DTE trades are executed as day trades, but not all day trades involve 0DTE contracts. Any option contract can be a day trade if opened and closed on the same day.

### Is day trading legal?

Yes, day trading is legal. However, you should check with your broker to ensure you have the correct account type and minimum funds to avoid the pattern day trading rule.

### What is 0DTE?

0DTE options, aka zero days to expiration, are option contracts that expire at the close of the day they are opened. Trading a 0DTE position means you entered the trade on the same day the contract expires, regardless of how long the contract has been available.

### What is pattern day trading (PDT)?

The PDT rule states that investors who make four or more day trades in a five-day period are considered pattern day traders and must maintain a minimum account balance of $25,000. Violating the PDT rule can result in your trading account being suspended by the broker.

### What is the difference between SPX and SPY?

SPX is an index option whose contracts derive their value from the S\&P 500 index. SPX is a European-style index option with cash-settlement and favorable 60/40 tax treatment. SPX cannot be traded like a stock; traders must use options to gain exposure.

SPY is an ETF (exchange-traded fund) that tracks the S\&P 500 but can be bought and sold and also has tradeable options. SPY is 1/10th the value of SPX. SPY is an American-style ETF with options that have physical settlement. Learn more about SPX vs SPY [here](https://optionalpha.com/learn/spx-vs-spy-how-to-trade-the-s-p-500).

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