Can someone please provide a mathematically precise description of how buying power works in a brokerage account? Everything I can find online is too dumbed down to be precise enough that you could take a portfolio and actually calculate buying power based on the explanations available.
So the way I will ask this question is to give a precise, although apparently incorrect, definition, hoping that any inaccuracies can be corrected. In other words, my question is where exactly the following goes wrong.
The maintenance margin requirement is only relevant to determining the issuance of margin calls (and disallowing a purchase that would cause a margin call), and the purchase margin requirement is only relevant to lending on new purchases.
For purchases, each security can act as collateral securing up to a certain percentage of the purchase price, not current price, so if stock A has a 75% initial margin requirement and it was purchased for $100/share, it can secure lending up to $25/share regardless of how it fluctuates in value.
Since lending is based on purchase price rather than current value, buying power does not change as security values fluctuate, except that the maintenance requirement is an independent and separate limitation on buying power in that no security can be purchased if after the purchase the maintenance requirement will not be met.
For maintenance, each security indicates a certain amount of equity that must be held in the account. So a security that has a 75% maintenance margin and is currently valued at $100/share, indicates an equity requirement of $25/share that is added to the account's overall minimum equity requirement. The amount of equity required by a security is based on the security's current value, not purchase price.
Options fit under these rules with 100% initial and maintenance requirements. This is equivalent to completely ignoring options: an account with the options removed has the same buying power as it had before the options were removed.
The above does not match the buying power reported to me in my Webull account, nor is it consistent with the fact that my Webull purchasing power fluctuates with security values in a setting where the maintenance requirement is definitely not an issue. So the above description, while unlike what I can find online is exact enough you could use it to actually calculate buying power in a real portfolio, it is also inaccurate in some way I can't find any information on.
EDIT: What I am asking for is a specific correction to my explanation given above. Every explanation of margin I can find is consistent with what I describe above, yet what I describe above doesn't match real world buying power. So what I describe above must be wrong somewhere, and I am hoping someone can point out the exact problem. Thanks!