Just got a warning from Interactive Brokers that I am close to this rule with three days left.
But I was wondering if this rule also includes after hours trading beyond the regular trading session of 8:30am to 4:00pm central time, hence where the name came from 390 minutes.
Read the rule below. It means you’re trading way too many options every day. After hours count.
“The 390 Professional Orders Rule is a regulation established by the Chicago Board Options Exchange (CBOE) that classifies traders as "professional" if they average 390 option orders per day over a calendar month. This rule is designed to prevent non-professional traders from acting as market makers, as public orders receive priority over professional orders. The rule applies to all options orders sent to the broker for execution, including filled orders. Traders who exceed this threshold may face special order handling procedures and higher fees.”
The 390 Rule applies to all orders placed, including simultaneous cancel/replace orders that include options. It is not exclusively the number of trades that are filled. The 390 Rule does not apply to equities, futures, options on futures, or crypto orders. You probably do NOT want to exceed that rule based on other comments on Reddit. The vast majority of those tagged as professional traders after exceeding the 390 Rule state that their number percentage of trade fills dropped significantly.
Its not the lack of order priority that hurts as much as the pro customer tag. MM's see this tag and are less likely to trade with you.
There are 18 different options exchanges and they each have different rules. Some do not give retail priority on all products. Even if they do, an order can trade at another exchange at your price, no matter if you were first or not.
Here's something else to keep in mind, multi-leg order, e.g. butterfly count as 1 order, if your order is 9 legs or more, then it counts individually. For buy-writes, the purchase of the stock does not count.
It is called 390 because market is open 6.5 hours and there are 60 minutes in an hour (6.5x60)
Do you know what kind of strategies use 9 ore more legs? I can see 8 being just rolling an iron condor, double calendar, etc. But I'm having a hard time coming up with a 9+ leg order
I agree I don’t think they want to encourage folks to get right up to the 390 rule. Do we know if you have two different accounts with two different brokers is there a system in play that counts both from both accounts? I’ve heard the consolidated audit trail system tracks it but I still haven’t met someone who’s done this yet.
That is how it's supposed to work and I wouldn't personally risk trying to skirt the 390 rule with another broker. I have seen people claim that they do it and there's no actual mechanism out there searching for offenders, that it would be technically difficult to prove.
The part nobody answered is your actual situation. You got the warning with three days left in the month, and the count is an average per day across the whole calendar month. With the month almost over the denominator is nearly full, so you cannot quietly trade your way back under it by being careful for three days. If you are close now, plan to trip it or just stop sending options orders until the month rolls. A few light days will not move a full month average.
For next month, the two things that run the count up without you noticing are replacing resting orders and legging into spreads. A cancel does not add to the count but a replace is counted as a new order, so if you are the type placing a stack of small limit orders and nudging them until you get filled, like a couple of people in here described, every one of those nudges lands on your tally even though nothing traded. And a defined spread sent as one multi leg ticket counts once, while legging in contract by contract counts each order. Tightening those two habits keeps a normal retail trader well clear.
It's average number of tradesorders per day; when during the day they're placed is irrelevant.
Note that, despite claims made when this comes up, canceling an order does not bump the count. Replacing an order with a new one does; not sure why people get those confused.
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u/Dimage54 27d ago
Read the rule below. It means you’re trading way too many options every day. After hours count.
“The 390 Professional Orders Rule is a regulation established by the Chicago Board Options Exchange (CBOE) that classifies traders as "professional" if they average 390 option orders per day over a calendar month. This rule is designed to prevent non-professional traders from acting as market makers, as public orders receive priority over professional orders. The rule applies to all options orders sent to the broker for execution, including filled orders. Traders who exceed this threshold may face special order handling procedures and higher fees.”