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Questions tagged [margin]

A margin account is an account offered by brokerages that allows investors to borrow money to buy securities. An investor might put down 50% of the value of a purchase and borrow the rest from the broker. The broker charges the investor interest for the right to borrow money and uses the securities as collateral.

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1answer
55 views

Securities lending program vs a Margin Account

Suppose I have a brokerage account and I am long on a stocks very heavily and there are short sellers who need this stocks from my broker. There are two ways a stock broker can lend securities held ...
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Why are margin maintenance requirements based on total account value and not just the margin debt?

Just reading through Charles Schwab's margin brochure and saw this section... The securities used as collateral must maintain a minimum value relative to the account’s margin debit balance. ...
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Why are vertical option spreads level 3, requiring margin?

Why are vertical spreads (e.g., buying a call at one strike and selling a call at another strike, at the same expiration date) classified as "Level 3" options strategies, therefore requiring margin? ...
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1answer
86 views

How does short margin works internally?

I understand the concept of being short, but I don't understand how it works, maybe is easy to explain with an example: 1) A has $1 in his account. 2) B has $1 in his account. 3) A wants to buy ...
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3answers
174 views

Sold a bullish vertical credit spread and was assigned early. Need information about a margin charge

Recently I was assigned on a short deep in-the-money put. It created a huge margin call. I called the broker the following day to exercise my long put to flatten out the position. He did that ...
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1answer
83 views

When is margin interest charged?

Let's say that I have a margin account at a major broker like TD Ameritrade or Interactive Brokers. I am trying to calculate what my cost would be to use margin and I would also like to know when it ...
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1answer
124 views

What is “Stock BP” in a brokerage account that's not trading on margin?

I saw that this question was answered on reddit here as well as a similar question was answered on this S.X here. But I wanted to confirm the meaning of a "Stock BP" amount if I'm not trading on ...
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43 views

Canadian Questrade margin account question

I have a Questrade margin account. I had more than enough cash and in error bought US stocks. I wasn't paying attention to my figures just whether I made money. Once I saw the interest payments being ...
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1answer
77 views

Extra large margin for government bonds

The value of my brokerage account is $1000x (Fidelity if it matters). Looking at my balances, I see that I am afforded an additional "government bond" buying power which is about $2250x. My regular ...
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592 views

Do I have to pay interest on a margin short sale if I post full cash collateral?

Let's say that I have $100 in my account and I want to short sell stock A. Stock A is valued at $100, so therefore I sell one share of stock A. In order to do this, the account is a margin account. ...
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75 views

Margin Trade: How do I calculate my margin level based on leverage and price?

Hoping someone could help a noob. Let's say I have 10,000 USD in an account and want to short ETH with 1,000 USD with 5x leverage (5k USD total). With this, my margin level be 1,000%, yes? (10,000 / ...
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84 views

Why are my funds locked up in my trading account while using bear put strategy?

Today I used a bear put strategy and I was surprised to see that some funds in my trading account were locked up as margin used. It is well known that the potential loss in bear put strategy is ...
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58 views

How are net income and yield calculated for margin trading?

You have purchased 150 shares at 10 each. You expect to sell these at 15 each. You only managed to sell 100. Out of your initial purchase price, 400$ were borrowed. Brokerage fee= 2% for the ...
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1answer
258 views

Details related to Upstox margin calculation

On the right is the screenshot of Upstox's span calculator for IDEA: Upstox's margin calculator I just want to confirm if I am understanding this right or not? So, according to my understanding, it ...
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1answer
110 views

No margin account and put expires ITM

This question is a followup to a recent and similar question on buying a put: When a long PUT expires in-the-money, whose shares are being sold?. Suppose I don't have a margin account, and I buy a ...
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Should I invest on margin?

I have an Interactive Brokers margin account, but so far, I haven't been using the margin; I'm considering doing so. According to https://www.interactivebrokers.com/en/index.php?f=18069, their ...
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275 views

Is possible to short sell stocks without using CFD?

the title is all my question :) Is possible to short sell stocks without using CFD?
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Explicit margin requirement for RPUT ETF?

I read RPUT ETF prospectus and there is this paragraph: The number of RUT Puts sold by the Fund varies month to month but is limited by the amount held by the Fund in Treasury bills, the value of ...
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1answer
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Stock / forex trading 100s of transactions per day - how is the margin calculated?

Let's say I have 10k USD in my margin account. I place 100 round trip orders in a single day, each worth 2000 USD (999 USD buy order and 1001 USD sell order). How much margin did I use at the end of ...
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103 views

Margin accounts and futures delivery

I'm trying to understand the market mechanics of futures with delivery. For sake of example, assume 0 interest rates and no cost of carry, and that I bought a futures contract on Jan 1 with Feb 1 ...
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2answers
4k views

How to use full margin (Robinhood Gold) while staying diverse

How is one able to add diversity to one's Robinhood portfolio while utilizing near 100% of Gold (margin)? I was told in my previous post, as well as reiterated by a Robinhood Rep, that when making a ...
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1answer
225 views

Is investment interest (i.e., margin interest in this case) deductible against dividends on state income taxes?

I am helping my family members (they live in New Jersey, USA) with their income taxes and came across something I was not sure about. For filing federal income taxes, investment interest (for purposes ...
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1answer
135 views

Margin limit calculation

I am new to the community, and I wish to add a question regarding the margin topic (something that I wonder if i am missing out on). Let's assume that my broker gave me a 1:10 leverage, and my "Good ...
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1answer
247 views

Theoretical Margin Trading Questions

I am just educating myself on margin trading (I have no real desire to try it any time soon) and was wondering if you may help me with a scenario and a few basic questions to see if my logic is ...
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3answers
183 views

By pass the 100% limit in shorting: Capitalising on a Market Crash

I want to short a cryptocurrency that is highly overvalued. Let say its current value as of now is $10,000 , my intuition say that sometime next year like Feb its going to fall significantly to about $...
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1answer
174 views

Zero cash buying power, what would margin maintenance be?

I have $0 cash buying power but have loads of margin buying power because of my current marginable securities. If I make a margin trade for any amount does that mean I have 0% equity in that position ...
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1answer
62 views

Variation margin on closed position

I would appreciate an explanation for the following problem: Trader A is long a futures position worth $10 and Trader B is the short counterparty. Since it is exchange-traded the contract is cleared ...
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2answers
210 views

Forex & CFDs good profits, but why?

First off, i am a total newcomer to trading. I opened an account with an online broker, am using their App with a 10k demo account. I am under no illusions when it comes to trading. I am not ...
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1answer
965 views

How profit margin can be higher than operating margin?

I was looking at fundamentals for SalesForce (CRM) and noticed that their profit margin higher than operating margin: Profitability Profit Margin 1.48% Operating Margin (ttm) 0.21% In my ...
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1answer
55 views

What's wrong with this margin calculation?

I'm calculating margin on put selling options using TDAmeritrade's formula. It can be found here on p.11: https://www.tdameritrade.com/retail-en_us/resources/pdf/AMTD086.pdf Using the first example ...
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Are Credit Default Swaps an adequate hedge for leveraged bond portfolio?

A hedge is supposed to be a cheaper bet that pays off if a primary bet isn't profitable. With a leveraged bond portfolio, my understanding is that a credit default swap (CDS) can help hedge, but I'm ...
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2answers
246 views

Are there good investment options to pay off student loans?

I just recently graduated uni and I'm hoping to try and apply what I learned in my finance classes to paying off my student debt. The biggest surprise to me during my studies was the realization that ...
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1k views

I was denied a margin account for being unemployed, what should I do?

I'm in Canada, and encountered something very strange in the last few months: my mother and I each opened an individual (not joint) discount brokerage account at HSBC InvestDirect. We both deposited $...
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511 views

Why do some stocks have a higher margin requirement?

When a stock is leveraged 2X or 3X, it will have a higher margin requirement for obvious reasons. For a non leveraged stock, what does a higher margin requirement say about that stock? Here are some ...
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2answers
197 views

Why is a margin account required for limited risk spreads?

If I try enter a limit order for an options spread I am denied being able to make this trade due to not having a margin account. Why? I'm not borrowing any money to make the trade, it's all in cash. ...
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1answer
587 views

What is margin in F&O trading?

I am new in trading and want to trade in Futures. I used the span calculator for that and get the following result : Buy 1 lot Sell 1 lot Initial margin 31,225 30,...
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1answer
4k views

Can I withdraw cash from margin?

Let's assume I have $100,000 worth in stocks: $50,000 I paid for in cash and the other $50,000 on margin. Can I sell the shares bought on margin and withdraw those $50,000 out of the brokerage account ...
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1answer
180 views

Can I use my long position stocks as margin for my short sold stocks?

Let's say I am going to use short selling as a way of hedging. For example, I will buy $100 of GOOG stock and short sell $100 PNQI. Let's say my broker wants 200% margin on short sells (100% my own ...
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1answer
198 views

Question about margin and investing

Lets say I have $10,000 cash in an account and margin buying power of $20,000. I sell a put that is worth $9,000 and it gets exercised. Will I be using margin since i have enough cash in the account ...
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322 views

Investing using leverage

As a trader, I understand the premise of Leverage and Margined accounts. I understand that it is almost necessary to use leverage in order to make money from trading. But the question is about ...
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280 views

Why do requirements after a margin call vary?

I have seen in various places that a margin call requires restoring an account up to The initial margin level (or having this done for you) or The maintenance margin level. As best as I can tell, ...
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2answers
528 views

What happens if stock purchased on margin plummets below what I have in the brokerage?

Lets say I have $5k in my brokerage account and I buy a 100 shares of $50 stock on a 4:1 margin. So I put up $1,250 leaving $3750 in the brokerage. 5 minutes later the stock plunges to $4/share and I ...
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153 views

How to consider the effect of margin call risk in a gamma scalping strategy

I am trying to tippy toe into volatility trading and volatility strategies. So I was reading Sheldon Natenberg where he starts off with a portfolio of long ATM call and short 50 shares of stock to ...
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94 views

Is there any minimum monthly payment required towards the margin amount borrowed from your broker?

When you take a loan from a bank, there is usually a minimum monthly payment that you need to make. When you take a loan from your broker(use margin), do you need to make a minimum monthly payment ...
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1answer
73 views

What margin is required to initiate and maintain a short sale

If I short 100 shares of a stock trading at 20$, what is my initial margin and my maintenance margin that I need to maintain with my broker? I have a REG T margin account.
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140 views

Will using margin always lower my sharpe ratio

Are there any good books/resources there that advise on guidelines on how to best use margin? Most advice about using a broker's margin goes like this 'Margin is risky. Only for experienced investors. ...
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791 views

How many naked option contracts can I write if I want to use maximum margin

Let us say I want to write a naked option on SPX in my interactive brokers margin account. If this is the only position I wish to hold in my account, and I want to use maximum margin, then what is the ...
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660 views

how much of foreign exchange (forex/fx) “deep liquidity” is really just unbacked leverage and what is the effect?

During the recent debacle of some high profile FX brokerages, I read some good articles that talked about FX brokers offering up to 1000:1 leverage ratios. Apparently it's pretty normal to find 200:1 -...
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77 views

How is option margin determined by my broker

How does my broker determine how much option margin they can or will allow me? For example if I have $1,000,000 in cash or stocks how do they determine how much option margin I may use?
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111 views

What is the best and most optimal way to use margin

Are there any discrete guidelines on the optimal way to to use margin in a Reg-T margin account? I am mostly looking to trade stocks, stock options and currencies. Most of the guidelines are vague ...