Margin Trading Questions (Reg T, Scaling in, Deposits)`

Question

I'm researching how to effectively trade on margin and I'm having trouble visualizing some scenarios and I haven't been able to find anything online so any help would be greatly appreciated.

Here are the hypotheticals:

• Scenario 1: Let's say I want to buy $10,000 of stock ABC at $100 per share. I have $6,000 cash so I buy the full $10k. I meet the Reg T rules because my original equity is 60%. Now a week goes by and the stock price is still $100 and I want more. Can I buy $2,000 more to max out the available margin for stock ABC? (I'm not saying this is a good idea, I just want to know how it all works). How does Regulation T work when scaling into positions? This second tax lot is 100% a margin debit so it doesn't fit the Reg T definitions that I've seen but because it's not opening a position does it not need to fit that regulation?
• Scenario 1a: Let's say I open a position of stock ABC with $1,000 cash where ABC is at $10 a share. A month later ABC is worth $12 a share and I want to enter a margined position. My current equity is $1,200 so I buy $1,200 worth of ABC. Would this violate Regulation T because my original $1,000 down is only 45% of the now $2,200 held ABC?
• Scenario 1b: Let's say I open a position of stock ABC with $1,000 cash where ABC is at $10 a share. A month later ABC is worth $8 a share and I want to enter a margined position. My current equity is $800 but I buy $1,000 worth of ABC. Would this violate Regulation T even though my original position open was $1,000?
• Scenario 2: Let's say I have 2 positions held on margin. Stock ABC has a margin debit of $1,000 and stock XYZ has a margin debit of $500. Some time passes and I deposit cash into the account, let's say $300. How does that apply to those margin debits? Is it even, meaning, now ABC has a debit of $850 and XYZ has a debit of $350 [Original Margin Debit - (Cash Deposit / Count of margined securities)]? Or maybe it credits the first balance? ABC was purchased on margin before XYZ was purchased on margin so the $300 cash deposit credits ABC's $1,000 margin debit and brings it down to $700?

These are very specific examples, I know, but I'd hate to make a mistake before I know the boundaries of what margin can and can't do! I appreciate any help

EDIT: Added Scenario 1a and 1b

Answer 1

Scenario 1: Yes, you can buy $2k more of stock because your total purchase price of $12k is supported by $6k which is 50% Reg T margin. As long as your broker doesn't require more than Reg T, you're good to go.

Scenario 1a: Fully paid securities can be used to meet the initial margin as long as they are marginable securities (generally the case). So yes, you can buy another $1,200 worth of stock.

Scenario 1b: $800 of equity cannot support the margin purchase of $1,000 of additional stock.

Scenario 2: Once you have met the initial margin requirement for your purchases, you are then subject to the margin maintenance requirement which is another calculation.

There are lots of web sites that explain margin. Here's one. Google for others.