Say I buy 1000 shares of XYZ @ 50.00 per share using 100% margin at the open. I then sell 1000 shares of XYZ @ 51.00 per share before the market closes. Will there be any margin cost? If yes, how will it be calculated?
Very likely no margin charges. I can't say with 100% certainty. It depends on what clearing firm your broker uses. Ask your broker.
dayraider, If I Buy 1000 shares of XYZ @50 (9:30am)and Sell 1000 Shares of XYZ @ 51(4:00PM-or until ECN close at 8PM). This transaction should be treated as "same day substitution "by SRO and NASD rules. You should get all the buying power back at the end of the day. However, some discount brokers may not update their systems real-time or may have trade settlement issues. At LWS and other direct access firms, say day substitution rules will apply. Please call your introducing broker and ask their policies regarding daytrading & same day substitution. Gene Weissman Lieber & Weissman Sec., L.L.C. gweissman@stocktrade.net
Thanks New_2_this and Gene Weissman for you answers. Another question...How would it be calculated if the 1000 shares was held overnight in a direct access account?
dayraider, Overnight margin in a customer account is 2 to 1. If I own 1000 shares of stock at 50 , I would be required to keep $25,000 in my account. Pattern Daytrader margin in a customer account has been increased to 4 to 1. A pattern daytrader must maintain a $25,000 account. A pattern daytrader is defined as trader who daytrades 4 or more times in a given week and these four trades constitute more than 6% of his/her total trades for that week. The 4 to 1 margin is the max allowed for the pattern daytrader in a customer account, individual brokerages do not have to allow 4 to 1 daytrader margin, if they do not want to. In a trading L.L.C. that is not a member of the NASD, overnight margin is determined by the firm. There is a max margin allowed for the firm under SRO and SEC rules, but this is too complex to go into. For individual trading members of our L.L.C. , we allow 5 to 1 overnight(in liquid NASDAQ 100 stocks & S & P 500 stocks) , with no more than 3 to 1 margin in one stock . L.L.C. margin is only available to Series 7 licensed traders who understand the risks associated with professional margin. Gene Weissman Lieber & Weissman Sec., L.L.C. gweissman@stocktrade.net