Put_Master
Registered: May 2009
Posts: 1029 |
07-29-12 02:40 AM
First, I'm going to assume this is a purely theoretical question, and assume you are not stupid enough to put yourself on that kind of margin (50%), in the type of volatile market we are in.
Let me also assume the nature of your question is about when you would start being charged margin interest, if you put more cash at risk on your investments, than you actually have cash to pay for.
Let me also assume you may not be aware that it is NOT stocks dropping, that wipes out investors accounts during severe market downturns, whether it be over a period of days, weeks or months.
It is being on excessive margin that wipes out most accounts.
Having said all that, if your goal is to be on margin, but NOT pay margin interest, then selling otm naked puts is one way to do it.
Sell puts on the stocks you are interested in, instead of buying the stocks itself.
As long as not many of the puts are actually put to you, you can go on the % of margin you stated, and not be charged any fees.
HOWEVER, just keep in mind even though you are not charged any margin fees, it is still the same as being on "regular" margin, and just as risky. But at least this way you get to pick your price, vs taking what the market offers you.
I know I did not answer your specific question, but I'll let others take you down that excessive margin road, as I don't know what your level of experience is.
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