James,
Re: Short margin requirement.
Lets say I'm long the 1000 shares of X $10 stock , and it stays
where it's at, So that's 10K , if I short Y $10 stock then I
can short 2000 shares ? = 20K , this may be were he confused me,
and I think I still am , but it don't look as risky ( as after all they have the 20K in my Short account )
With 1000sh@$10, your stock buying power is $10K. The initial requirement for short is 150% of SBP, so you can short up to $10K worth of Y or 1000 shares. The next day, and everyday that follows, your maintenance requirement is then in effect, i.e. as long as
X/30% > Y
, you are OK.
The spirit of the initial requirement is to limit the amount of trades in a day to your BP. The goal of the maintenance requirement is for the brokerage house to recoup their loan to you should the market tanks.
Hope this helps. |
