dumb question about margin and shorting

Discussion in 'Trading' started by mockingbird, Jan 3, 2002.

  1. Magna

    Magna Administrator

    Have to agree, but would add the same for going long. The key, vis a vis experience, is the 4000 shares, not the direction. :)
     
    #11     Jan 6, 2002
  2. I've noticed that many ETF's have a margin requirement of 50% for long positions and 150% for short positions. In this instance I assume that one may not be able to hold as many shares short as one may be able hold long for a given account value. If this is a misinterpretation, please let me know.
     
    #12     Jan 6, 2002
  3. Schwab, a few years ago, used to have similar rules/wording like this. The reason is simple. As you short (which is a sell) the proceeds goes into the account. They want to make sure that the proceeds doesn't count towards your account margin balance; so they count a short as 150% margin to remove the proceeds from the marginable account balance.
     
    #13     Jan 6, 2002