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Buying on margin refers to buying of securities with cash borrowed from a broker with securities acting as collateral, covering a portion of the risk of the position. This use of margin magnifies the potential profit or potential loss and both exceed the amount of the collateral. It does not mean that the position is risk free. At 100:1 leverage, the ...


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This question is sort of answered in the podcast (and worth a listen): NPR Planet Money Episode 471: The Eddie Murphy Rule (July 9, 2013). From the transcript: [Host] SMITH: And this dramatic, crazy, clearly Hollywood ending - the bad guys lose everything, they get booted out of their rich positions in the market - this really happens sometimes, according ...


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Your question is based on a lack of understanding of margin (I'm assuming that you're talking about the U.S.). Let's start with the margin requirement. If you want to buy shares on margin, under Reg T, the FRB requires 50% of the value of the purchase (brokers can require more). So if you want to buy 100 shares of a $10 stock on full margin then the ...


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Regulation T requires that at least 50% of the money you are trading with be your money. If you fail to meet this requirement, stocks will be sold to both reduce what you're borrowing and increase what you're holding until the required 50% margin is met. This only applies to margin accounts. So, for example, if you hold stocks worth $4.00, your account must ...


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For example a long leveraged etf may actually go down, even though the stocks it tracks go up, because they use complicated financial instruments to achieve leverage. Typically, such a discrepancy is because of daily rebalancing, not "complicated financial instruments". That is, each day the ETF will go up if the stocks go up, but compounded ...


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Traditionally, Reg T margin for long purchases is 50% and the margin maintenance requirement (MMR) is 25%. Brokers can require more margin and some who previously were at the Reg T limit raised it before the election due to the expectation of volatility (some raised it this week but AFAIK, just for a limited number of stocks). Your guess of $71....


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Fully paid marginable securities can be used to buy additional securities on margin. The formula for this is: [ (Securities Value) x Margin % ] / [ (100% - Margin %) ] In the US, Reg T initial margin is 50% so if you put up $10k of securities then you could buy another $10k of securities ($10k x .50 ) / (100% -50%) In the US, maintenance margin is set is 25%...


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If you take out $100k, your position in VTI cannot drop below $133k (cannot drop more than 55%). Maintenance margin is usually 25%. This means that you cannot owe more than 75% your account's worth. If you borrow $100k and your VTI position is worth $300k, you owe 33% of your account's worth. If your position in VTI goes down in value to $133k, you owe 75% ...


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In a perfect world, a broker would notify you that the margin requirement and maintenance requirement are going to be raised, giving you time to increase your margin via adding additional cash or reducing position size. But it's not a perfect world and after a margin increase, many brokers would immediately liquidate positions to satisfy a margin deficiency,...


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I wonder, is there is a safe margin loan, Loan Value Ratio (LVR) to avoid a margin call? There are three factors involved in determining at what price you receive a margin call: Initial margin requirement (50%) MMMR or minimum margin maintenance requirement (25%) the amount that share price drops The numbers in parenthesis are the levels set by Reg T in ...


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This answer is the same as what Axiomatic Nexus explained but just in a somewhat different fashion. Reg T margin is 50% so if your broker's rate was the same, you could buy $300k of stocks with cash or fully paid marginable securities. In your case, you are taking a margin loan of $100k and your equity reduces to $200k. If the margin maintenance requirement ...


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Any respectable broker will offer after hours trading. Some require that you request that ability (a formality). Then you can close the position. If the value of your account drops below the maintenance requirement, most brokers will close the position immediately and most certainly, if there's a huge gap and your margin is next to nothing or gone. And yes,...


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Once you take a contract position, you can win or lose generally an infinite amount of money. The price you pay to get in to the contract has nothing to do with anything. Once you are in the contract, you can win or lose generally an infinite amount of money. Margin sits there to cover you when you lose.


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Standard Reg T margin is 50% so the requirement for shorting a stock with a market value of $1,554 could be $777. Why did I say could be? Stocks below $5 are not marginable Leveraged ETFs have a higher margin requirement Brokers can have a higher margin requirement than Reg T Some of your cash could be tied up by other margined option or stock positions ...


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Seems like an unfinished question... A margin call is a margin call. You either meet it or your broker will do whatever is necessary to bring your account into compliance. FWIW, 3 margin liquidation violations in a rolling 12-month period will lead to a restricted account.


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I'm not familiar with your broker, with the security you mentioned, your currency or your locale so this is a U.S. centric answer. If you buy a security such as a stock, option or ETF with 100% cash (no margin), you have no risk beyond the cost of your investment. In the case of a fully paid 100% cash purchase of a security, an account (usually a margin ...


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Since I'm not familiar with the E-Mini, I can't solve this with the shortcut formulas such as is done in a combined long/short equity account which I am familiar with. You could then set up a spreadsheet if you know the margin requirement of the E-mini which would be combined with the maintenance requirement of your SPY position. Note that the individual ...


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You can disregard the Buying Power number because that relates to the 4X intraday margin that a Pattern Day Trader is allowed. The PDT requirement is $25k account value and this is only a $200 account. What you are suggesting amounts to buying $200 worth of stock with $100. The account value level at which a margin call will be triggered is: Account Value = ...


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If you wrote a call option, and the underlying spiked up creating a margin call - which was not filled, can your broker make it appear that they executed a 'buy to cover' to close your position but in actual fact just take on your short position? What does which was not filled mean? Are you saying that you did not meet the margin call by adding additional ...


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There are 6 basic synthetic positions relating to combinations of put options, call options and their underlying stock in accordance to the Synthetic Triangle: Synthetic Long Stock = Long Call + Short Put Synthetic Short Stock = Short Call + Long Put Synthetic Long Call = Long Stock + Long Put Synthetic Short Call = Short Stock + Short Put Synthetic Short ...


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You reference the Great Recession specifically, which was the 2007-2009 recession. The bear market of 2007-2009 lasted 1.3 years and sent the S&P 500 down by 50.9%. - investopedia, A History of Bear Markets The article also references the 1929 Stock Market Crash, which “sliced 83.4% off the value of the S&P 500”. There isn’t a ‘safe’ LVR. Even ...


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