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Strategies & Market Trends : DAYTRADING Fundamentals -- Ignore unavailable to you. Want to Upgrade?

To: Paul Viapiano who wrote (509)	6/11/1999 7:47:00 PM
From: Ira Player	Respond to of 18137

You need to look at it as though all of the stock is "margined". Since the value of your $50K "borrowed" is now $25k, your $100K owned is still $100K and you owe $50k that you borrowed. Initially -- $100k + $50k - ($50k) = $100k equity $100k equity / $150k value = 66.7% equity After the drop -- $100k + $25k - ($50k) = $75k equity $75k equity / $125k value = 60% equity With your example, a $50k loan will not generate a 50% margin call until the equity reaches $50k. (A 33% overall loss in the account, but a 50% loss to your equity) If the margin call is generated at 30%, the equity can drop to $21.43k before a call is generated. $21.43k / 71.43k = 30% (A 52.4% overall loss in the account, but a 78.6% loss of your equity) Hope this helps, Ira

To: Paul Viapiano who wrote (509)	6/11/1999 8:22:00 PM
From: Joe Lyddon	Respond to of 18137

Margin: Nothing more than borrowing money using your acceptable (marginable) stocks as collateral. Rule: You must maintain your collateral (value) vs what you borrowed(owe) to a specified % (or more). If you borrowed using your house as collateral & the value of your house suddenly dropped (not likely to occur), there is probably fine print in the loan papers that state "pay us more money... you don't have enough collateral any more". Same way with stock... Stock CAN drop suddenly... Bingo... Help?