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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Calculating Canadian Capital Gain or Loss After Loan and Investment
Consider the following hypothetical scenario involving trading with margin in Canada w/ made-up exchange rates:
I take out a $100,000 USD loan on Jan/01 - ($150,000 CAD)
I lose all of it immediately ...
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Do you pay interest on trading with unsettled funds in a margin account?
If you buy/sell a stock with 100% of your account (not on margin, but with a margin account) will it just be settled immediately, or do you need to be on margin and pay interest to be able to trade ...
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Margin calculation on short and long positions combined
Assume an investor goes long on X1 and simultaneously short on X2 both of which cost $1. With margin rate at 50% he is required to deposit 0.5 + 0.5 = $1 margin to make the transaction. My question ...
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What's the relation between free margin and drawdown? (and leverage)
I'm trying to understand whether different leverages can affect the drawdown in forex/CFD trading.
I have noticed that given the same lot size, the bigger the account leverage, then the bigger is the ...
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Will broker release some of the margin to cash account if the market go in my favor?
Say the broker requires a init margin of 40%, and a maintenance margin of 30%.
If I buy 10000 USD worth of stock, depositing a margin of 10000 * 40% = 4000 USD. How do I calculate the required margin ...
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Net Liquidity vs. Maintenance Margin margin call approximation
I have been trying to understand margin calls properly, but since my margin was always insignificant I never really did. Now that my stocks dropped significantly I feel like I may be close to a margin ...
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Mathematically precise explanation of buying power
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 ...
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Can I buy index funds without margin and own it like a stock?
I am a total newbie so this might be a silly question but I am trying to buy S&P 500 and own it like a stock.
The problem is that my broker (XTB) only has the option to buy it with margin and ...
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Is this article correct about leveraged tokens?
In this article, it says the following:
Let's say you're interested in buying Bitcoin, so you purchase $100 of it. After a day, the price has increased by 10%, and your investment is worth $110. But ...
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What are the implications of owing more money than is currently in circulation?
I recently found this reddit post in which a user found a bug in a software that did not set a limit on a margin call (my knowledge of what a margin call is is really shaky so I might mess up words), ...
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Futures Options: Options Expiration vs. Underlying Delivery
Does the expiration of a futures option always determine the delivery date of the underlying, in particular does the option always expire into the earliest-delivering futures contract?
For example, /...
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How Do I Trade With Margin On E*Trade?
I'm new to Margin altogether and need some help. Here are my numbers:
Total Margin Requirements $0.00
Total Margin Equity $190.68
Adjusted SMA $205.34
Maintenance Excess ...
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Margin Trading Questions (Reg T, Scaling in, Deposits)`
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 ...
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Why is there a maintenance requirement for securities in a margin account with equity 100%?
In TD Ameritrade, margin accounts show a maintenance requirement for the account even if no loan was used to purchase any of the securities. Why is this? How could a margin call ever happen if no ...
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Margin: Is my math correct?
I was recently introduced to the concept of margin and have been reading about it on and off for the last 2 months. I want to use margin funds for my house remodeling, and would appreciate if someone ...
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What's the practical risk of reusing trade proceeds?
I built an algo that buys and sells securities in a few minutes. The idea would be to let it do that hundreds of times a day.
After some paper trading tests, I wanted to test it with a couple real ...
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Using margin/leverage to buy index funds [duplicate]
Brokerages like IB has pretty low sub 2% interest rate per year while index fund grows 10%. Is using borrowing/margin to amplify and purchase more shares of stable growth stocks like snp500 index ...
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Hedging a portfolio by shorting index - Margin calculations
I wish to run a long-only portfolio of stocks and hedge it during turbulent times by shorting a correlated index.
I'd rather short an index ETF for hedging instead of flattening my position. My ...
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How does maintainance margin work when withdrawing money on margin?
I have an account with IB and 50% maintenance margin.
The most common use of margin ist buying stocks with loaned money, for example:
You buy 100 shares for 1$ each, 50% of which is your money, the ...
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What calculations do I need to make to have sufficient balance in my account to avoid margin penalty?
I am talking about NSE (India) here.
Clearing corporations (CC) take 4 snapshots of client positions at random times during the day and see if there was sufficient margin available
and, if there isn’t ...
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Covered call buy-to-close using sale of underlying?
If I write a covered call, my account will be long the underlying and short a call. Say I withdraw the premium from my brokerage account and spend it, invest it elsewhere, etc.
If I want to later sell ...
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What happens if a futures exchange increases margin requirements while I have open positions?
Specifically, what happens if my current position is already close to (or at) the maintenance margin level and the exchange then increases margin requirements?
For example,
First Day (end-of-day):
...
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Can a leveraged ETF's net assets suddenly go below zero?
When trading stocks on margin or when holding futures, sudden price movements may wipe out the posted margin. In some cases, the trader may even lose more than the posted margin (i.e. the trader owes ...
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How does a margin account help with debt consolidation?
I have a trading account with TD Ameritrade and I also upgraded to a margin account. I was reading through their materials and they state that a margin account can help you consolidate debts and move ...
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Can a broker liquidate your position after market hours?
Let's say I short a stock and hold it overnight. And let's say it's doing very badly and the stock is gapping up over 100% during after market hours. Since I can't use a stop loss during extended ...
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If you exceed your daily buying power, can you sell after market?
I have a margin account exceeding the required 25,000.
I exceeded my daily buying power to buy a stock. I got a message saying that if the positions are not held overnight, there would be restrictions ...
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How does losing money (under margin) work?
I am trying to understand how loss of money works when one uses margin.
In the picture below, if price goes into the green area, I make money. If it goes into the red area, I lose money.
Suppose I ...
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Calculating Liquidation levels with Margin
When using margin on an exchange, is there a function that one can run ( hopefully using python ) that can calculate the Liquidation Price Level when entering
How much to spend and
the Margin level ...
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Questions about Margin in the Futures
(I'm beginner)
1- Can I buy/pay the whole contract price without margin (the broker will have no risk at all then- no need for maintenace margin) ?
2- Is this borrowing money so I need to pay interest ...
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How badly will my credit score be affected if I don't pay back a small margin debt?
I recently started trading stocks and was trading on ameritrade. I went in with just a little money to play around with and try and learn about it, but I forgot to turn off margin trading apparently.
...
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Does a one stock leveraged ETF behave like margin?
I am reading about leveraged etfs and I am very confused. It seems they don't always follow the stock prices they should be following and not always doing what they are supposed to do.
For example a ...
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If a stock is bought with unsettled Cash, is there a way to use margin to sell it immediately without a good faith violation?
If I purchase a stock with unsettled cash, and then it immediately spikes, is there a way to use margin to sell it without invoking a good faith violation? Essentially borrowing the money until it ...
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Operating Margin depends on Revenue?
It is said that high Operating Margin means that the company is efficient in its operations and is good at turning sales into profits.
But let's suppose that market demand has increased. The company ...
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Not clear about margin requirements on Shorting Puts
I'm trying to understand how Margin Requirements work when trying to sell a Put Option without having sufficient cash to cover the Option in case it's assigned.
For example, let's say I have $100 ...
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What is the difference between margin trading and short selling?
In margin trading, you borrow money from a broker to purchase securities. In short selling, you borrow securities to sell them. Still, in both cases, you are borrowing from the broker. Is the only ...
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Is investing in 2x QQQ (QLD) the same as investing in my account buying QQQ but making it 2x using my margin?
It seems to matter for the following, if the increase or decrease happens evenly over 30 days vs if it happen overnight, for the case of Account 1, but does not matter for Account 2. So what if (1) it ...
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Can I use stocks as margin for commodities futures?
Last week, I bought 4 shares of emicro gold futures (https://www.cmegroup.com/trading/metals/precious/e-micro-gold_contract_specifications.html) worth about 70k. I got a margin call for owning those ...
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Is there an exact percentage drop for a stock for it to trigger a margin call?
I think in US stock market, it is common to be able to borrow 100% and buy the stock, and the margin requirement is 30%. (some firms call it "Margin Maintenance Requirement" or "MMR&...
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Why is there a financing fee for holding a CFD overnight?
I read in lots of places that you pay an overnight financing/margin fee for CFDs, making them not suitable for long term holding - as the overnight fees add up. What I don't understand is, what is the ...
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Can (did already) the GME-related hedge funds cover the $5 billion?
Yet another GME question I'm afraid. Straightforward...
The GME-related hedge fund(s?) in question lost about $5 billion.
Thus, they have to send a cheque for $5 billion† to their broker(s), and/or ...
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Margin call/maintenance question
I am now facing a margin call, and I have a question,
Bought a stock at $x on %50 margin maintenance
After Jan 28, the stock dropped, and my margin maintenance increased to 100%
It says I need to ...
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What is the actual reason the short sellers of GME can't just hold their positions until the price goes back to normal?
Thinking about the current situation where GME has been shorted by more than the existing float, I think I have a basic understanding of short selling as selling shares you've borrowed. I've seen a ...
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Why is maintenance margin at 50% if initial margin is at 100%?
Let's say I open an account with a broker (plus500.com), to invest on margin.
I want to open a position (in that case £100 on CDR:WSE) without leverage. It asks me an initial margin of 100%, meaning I ...
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IBKR charges different interest rates on margin loans denominated in different currencies. Why not take out the loan in the cheapest one?
For example, the top interest rate for margin loans as of today in AUD is currently set to 1.5%, while for ZAR the interest rate is set to 8.057%. That is a huge difference. If I were in South Africa, ...
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Is there a rule of thumb for 'safe' margin percentage?
I have read rules of the thumb on [sources] that may say things like "don't put more than 20% of your holdings into one stock", etc etc... Is there a similar safe-side rule of thumb for ...
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In a trading account what is the difference between margin and collateral?
What does it mean when someone says a trade requires 10%, 100% or 150% margin?
What kind of calculations are required when you talk about margin and collateral?
What is a margin call and when does it ...
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How do futures affect my maintenance margin requirements in my margin?
Hypothetical Background: I have an Reg T margin account with Interactive brokers. I have a maintenance margin requirement of ~30% for that; I have calculated the drawdown necessary to get a margin ...
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Portfolio margin account overnight leverage
I know for a regular margin account, the requirements of Regulation T generally limit leverage on equity to 2:1, which means SMA has to be positive for overnight.
How about a portfolio margin account? ...
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Is there any way to use margin in your account without incurring interest charges?
Is there any way to use margin without incurring interest charges?, say I purchase 200 shares of stock with 2000$ of margin on the 11th day of the month, I then sell the 200 shares on the 12th day of ...
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Do dividends from securities held on margin lose their tax advantage?
If a security pays a dividend, depending on the holding period of said security, the dividend might be considered "qualified" and taxed at a lower rate. What if the security is held with ...
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