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.
Per the SEC’s approval of CBOE rule regarding professional trading: “Professional means any person or entity that (i) is not a broker or dealer in securities, and (ii) places more than 390 orders in listed options per day on average during a calendar month for its own beneficial account(s). A Professional will be treated in the same manner as a broker or dealer in securities.”
Read the CBOE's Regulatory Circular RG16-065 to learn more about how they classify professional orders.
Placing one order per minute every day of the month will qualify you as a professional trader per the CBOE. Most retail traders are not at risk of sending 390 orders per day, but it is something to keep in mind if you have high trading volume. If you submit an order for a multi-leg option strategy, such as a vertical spread or iron condor, it counts as a single order, until you exceed 8 legs per order.
Why does the '390 Rule' exist?
The purpose of the 390 Rule is to prevent non-professional traders from behaving as market makers. Non-professional (see: public, retail) orders are prioritized over professional orders. Therefore, the 390 Professional Orders Rule ensures that professional traders do not receive priority over retail customers.
Tracking your options orders
You can easily track your orders inside Option Alpha's trade log in the Positions tab.
All orders sent to your broker from Option Alpha are displayed here, including filled, canceled, rejected, and working orders.
Plus, you can now use a Maximum Exit Option Attempts Setting to automatically limit the amount of closing orders sent to the broker. This helps retail options traders control their order volume and helps to avoid the 390 Professional Orders Rule.
