My broker allows me to sell shares in the lots that they were bought.

For example, the fictitious NuCo, In., in order of purchase:

Lot A: 300 Shares of NUCO at $20
Lot B: 300 Shares of NUCO at $17
Lot C: 600 Shares of NUCO at $12
Lot D: 600 Shares of NUCO at $15

Let's say Lots A and B were bought using leverage and all others were bought with cash. I was able to buy A and B by borrowing because the majority of the account value sat in long term positions that that allowed A and B to be purchased well below to margin limit.

If want to sell lots C and D at $16, will I have paid my broker back, or still be using the borrowed margin account money?

The default sell order is FIFO (first in, first out).

This is a simplified version of a bad position I bought my self out of. The numbers were made up in order to show an average cost-per-share around $15.

I would like to sell off C and D to take the earnings and hold A and B expecting a recovery.

Since A and B were bought on margin, would they remain loans if I sold C and D.

1 Answer 1


If this is the US then the maximum amount of margin borrowing for equities is 50%.

Lots A and B cost a total of $11,100 so that would be $5,550 borrowed (50%).

Lots C and D sold at $16 would generate $19,200 in sale proceeds so the margin loan would be paid off.

  • Sorry, to clarify, assume I had other long term holdings that were being used as the leverage in other stocks. My question is really is the loan tied to the lot? Commented Dec 7, 2019 at 7:40
  • A and B were 100% borrowed Commented Dec 7, 2019 at 7:53
  • 1
    You must have 50% of their value (SMA) in your account in order to buy them on margin. No, the loan is not tied to the lot. The loan is collateralized by the cash and/or marginable securities in your brokerage account. Read this: investopedia.com/terms/s/specialmemorandumaccount.asp Commented Dec 7, 2019 at 13:42
  • thank you, I didn't understand what the SMA was before. Could you make this comment the answer? Commented Dec 7, 2019 at 18:15
  • Would you also mind making an SMA tag? Commented Dec 7, 2019 at 18:32

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