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Let's say the margin requirement for a stock XYZ is 50%. The current price of XYZ is $150/share. Let us say I put in $100, and borrow $50 from the broker to buy a share.

Typically, how far can the stock drop before I get a margin call?

Is it $75 (50% of $150)? Or is there more to it?

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    I believe the margin should be mentioned in your terms and conditions, or they might be having specific margins for specific entities(should show up when you give an order). I would look at your brokerage contract you signed when you signed up for an account. – DumbCoder Feb 19 '14 at 17:47
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With your numbers, look at it this way - You borrowed $50. When the stock is $100, you are at 50% margin.

What's most important, is that there's margin interest charged, so the amount owed will increase regardless of the stock price. When calculating your return or loss, the interest has to be accounted for or your numbers will be wrong. For a small investor, margin rates can run high, and often, will offset much of your potential gain. What good is a $100 gain if you paid $125 in margin interest?

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  • Thanks. When stock is at 100, it means it is 50$ of my money and 50$ of broker's money? In that case, it seems I am at 100% margin. I am not able to get this part. – Victor123 Feb 19 '14 at 17:22
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    You have $50 in equity out of the stock price $100. $50/$100 = 50%. Margin is your percent owned. In your example, you started with 66% margin. 100% margin = no loan. – JTP - Apologise to Monica♦ Feb 19 '14 at 17:33
  • Who charges 150%? – user11865 Feb 19 '14 at 17:39

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