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Strategies & Market Trends : Shorting stocks: Broken stocks - Analysis

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To: Kurt N who wrote (1345)7/4/1998 12:40:00 PM
From: Q.  Read Replies (1) of 2506
 
Kurt, re. margin requirements for shorts, one discount broker I use requires $5 or 1/3 of stock price, whichever is greater, as the maintenance equity for a short position. This particular broker allows me to enter a short sale only if the stock is over five bucks, but of course I can remain short if the stock falls below five.

If I short stock at $14 and it falls to $5 or $2 or even $0.0001, my margin capital situation is unchanged re. the maintence requirement.

I recommend that you phone the 'margin dept.' of your broker to explain how it works for you.

Further discussions of these issues should be carried on in our 'mechanical aspects of shorting thread':
Subject 15252
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