Stock Margin Trading

Margin maintenance calculation

( Market value of positions * maintenance margin % (30-40%) ) - net liquidating value = amount to bring-in to settle margin call (if negative, you are in good standing)


  • IF margin maintenance < net liquidating value
  • THEN you are in good standing

Chat log ThinkOrSwim

10:51 nyeates1: I have just sold a large chunk of aapl shares to get out of the long-time (almost a year) position that I held in margin. I had many margin calls, yet it was luckily never enacted. I took this market rebound as a chance to get out of the dangerous margin. 10:51 nyeates1: Can you tell me, am I now ‘in the clear’? 10:52 nyeates1: Also, do I truly have excess cash in my account? or no? Where do I look to tell this? If I have excess cash, I would like to possibly buy more back to get the optimum/maximum I can, WITHOUT BEING IN MARGIN. 10:53 Pat: one moment . let me check 10:53 nyeates1: I have a hard time understanding what portion of my stocks are margin, and what future portion might become margin, if I were to buy again. 10:54 nyeates1: You all might want to consider making margin purchases more clear to the trader, or more stats about margin in the Account section, and when making orders. 10:55 Pat: in the account section, if the cash figure is positive, you are not on margin. if it is negative(in parenthesis) , then you are on margin by that amount. 10:55 Pat: so currently, you are on margin by about 1592 10:55 nyeates1: where did u find that, so I can find it myself in the future.... or how did u calculate 10:56 nyeates1: cash balance? 10:56 Pat: if you click on account summary, the option buying power figure that comes down of 1235 is how much you can invest with the stock buying power number being double that. 10:56 Pat: this would all be margin, though, sionce you are already on margin 10:57 Pat: if you go to account page, the first line is cash balance 10:58 nyeates1: gotcha, thanks.... some more follow up questions... 10:58 nyeates1: if I were to sell 1592 worth in stocks sometime in the future, this would bring me out of margin (debt) correct? 11:01 Pat: yes, if you sold 1592 worth of stock that you currently own, that would cover your margin. 11:01 nyeates1: Because my margin, is now significantly lower than before (by 18,000 or so), I should not see a margin call, nearly as easily in general, correct? 11:03 Pat: correct. you’ll see a margin call when your equity is 30% or lower of the market value of the stocks that you own. so your stocks are about 5700 with margin of about 1600 means your equity, or net liq since its all stocks in portfolio, is 4100, which is much more than 30% equity 11:07 nyeates1: Thank you for that detailed explanation of margin call calculation. I will understand it later in depth.

Once I get out of margin, example: I sell 2000 worth of stock that I own, putting me 408 into the positive (2000-1592) . How can I be sure to NOT get back into margin, if I do not want to? What figures do I look at when making a normal stock order, or in the Account section, to tell if a purchase will lead to margin? 11:08 Pat: cash balance 11:08 nyeates1: just keep that above 0, and Im not in margin eh? 11:08 Pat: yes 11:09 nyeates1: Ok, thanks for being patient as I learn this unfamiliar system. You have been the most helpful responder out of many on here. 11:09 nyeates1: I would like to send a thank you to your supervisor, if you would like. If so, let me know his/her email! 11:12 Pat: that’s very nice of you. but you don’t need to do that. thank you very much. 11:13 nyeates1: ok great. How do I copy the conversation above to paste. I am on a mac and i can select it but command+V or the copy button you all provided arent grasping it 11:13 nyeates1: command+C I mean 11:14 nyeates1: actually I just found the save feature, maybe that will work, tho more cumbersome 11:14 Pat: just copy it to a word document or if you like, i could copy and paste it to an email and send it to you

finance/margin.txt · Last modified: 10.30.2008 11:16 by
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