What does it mean when someone says a trade requires 10%, 100% or 150% margin?
What kind of calculations are required when you talk about margin and collateral?
What is a margin call and when does it happen?
What does it mean when someone says a trade requires 10%, 100% or 150% margin?
What kind of calculations are required when you talk about margin and collateral?
What is a margin call and when does it happen?
The word margin has several uses:
Buying on margin refers to money borrowed.
Initial margin requirement refers to the amount of collateral required to buy on margin (cash and/or marginable securities). It's 50% unless you're trading leveraged securities or your broker imposes stricter margin requirements.
Margin maintenance requirement (MMR) refers to the amount of collateral you must have to maintain a margin position (25% for long positions and 30% for short positions unless you're trading leveraged securities or your broker imposes stricter margin requirements). A margin call occurs if your account equity drops below your MMR.
Here's an article which explains long and short margin calculations.