How to calculate margin call point?

Discussion in 'Risk Management' started by Loko, Jan 6, 2009.

  1. Loko


    Hi all,

    I have margin account with $12,200 on it.
    I purchased 1900 shares with average price of $7.31 for $13,889.

    So I purchased for $6,944.50 and my margin requirement is $6,944.50.

    For purchases of marginable stock I need to put up 50% but I only need 30% to hold it. So I know that If I bought for the full amount of $24,400 my margin call would be triggered if stock falls 20% below my purchase price and that equals below $19,520, and that part is clear to me.

    But on what price would be triggered my margin call when I purchased stock for only $ 13,889 (as I mentioned above) and have another $5,255.50 on my account.

    If someone can clarify that to me I would be really gratefull.
  2. jsmooth


    You got $12,200 cash, and you only purchase $13,889 of stock....your debit balance is actually only $1689 - at the end of the month your only going to pay credit interest on 1689. The stock would have to drop significantly in order to get a call....or turn non-marginable, then you would just get a margin call for the $1689....this is all unless you dont purchase any other new stock, or withdraw any money, thus increasing your debit balance.

    Call your broker and ask him, at what price will your stock become "non-marginable"....that would be the price your get a margin call for $1689. As of right now you have an equity % of 88% (12200/13889=.878%)
  3. Loko


    Jsmooth thank you!
  4. What broker are you using?

    aka Cajun Sniper