Calculating Buying Power

Discussion in 'Retail Brokers' started by FroggerMan, Oct 16, 2010.

  1. I have account with Options House and Fidelity and they both calculate Buying Power as (Cash Debit or Credit + SMA)/0.50. For SMA, to simplify things let’s just say your stocks haven’t changed in value since you purchased them. So the SMA = the value of your current holding * 0.70. (Assuming the maintenance requirement is 30% which is true for both brokers.) So if you have $1,000 in cash + $5,000 in stocks your buying power would be [(1,000 + (5,000*0.70)]/0.50 = $9,000.

    I recently opened an account with SogoTrade solely because of their shortlist. Even though their maintenance requirement is 30% like the other brokers, the way they calculate buying power is Reg T Excess divided by 0.50. So if you have $1,000 in cash + $5,000 in stocks your buying power would be [(1,000 + (5,000*0.50)]/0.50 = $7,000.

    I have never heard of buying power being calculated this way. I’m guessing not many people here use SogoTrade, but for those of you who use SogoElite or Laser is this how they are calculating your buying power as well?

    Also if anyone’s broker calculates buying power differently from (Cash Debit or Credit + SMA)/0.50 I’d be interested to hear how they do it. I’m leaning towards moving my SogoTrade account to IB so if anyone has the formulas that they use I would appreciate it.