Wayne:
I only read the first few sentences and the margin figures didn't seem right. The following is an example of a regular margin account, not a PDT.
Example: 1
Buy $80,000 of AMZN
$80,000 CMV (current market value)
- $40,000 Loan Value
-----------------------
= $40,000 Customer's Equity
- $40,000 Reg T initial call
-------------------------
= $ 0 Excess Equity (buying power)
Example 2 Current Market Value drops to $70,000
$70,000 CMV (100%)
-$40,000 Loan (57%)
------------------------
= $30,000 Equity (43%)
- $35,000 Reg T (50% of CMV)account status change only
------------------
= $(5,000) Excess Equity ACCOUNT RESTRICED further
purchases require 50% initial deposit.
Now a quick and easy way to determine how far your account can drop before a maintainence call is to divide the loan value by 75% (inverse of 25%)
Example 3
$40,000 Loan / 75% = $53,333 (rounded)
$53,333 CMV (100%)
-$40,000 Loan Value (75%)
-------------------------
=$13,333 Equity (25%) Maintainence call below this.
For shorting, Reg T calls for 150% (sales proceeds plus 50% Reg T.
To determine the maximim market value your account can advance divide total credit (sales proceeds plus 50% Reg T)
by 130%
Example 4 Short $80,000 AMZN
$80,000 (sales proceeds)
+$40,000 (Reg T)
----------------------
=$120,000 Total Credit
$120,000 / 130% =$92,308 Maintainence call above this.
I hope we are taking about the same thing. If not, sorry for the confusion.
Regards,
Dominick
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