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Strategies & Market Trends : Margin Calls - Share The Pain -- Ignore unavailable to you. Want to Upgrade?

To: htransport who wrote (46)	12/1/2000 12:05:32 AM
From: daffodil	Respond to of 158

htransport, you're absolutely correct. The $333,333 wasn't a typo, it was the correct amount. I guess it goes to show how terrified I am that I'd make a typo or --worse-- a real error in doing these margin calculations online. When someone said it must be $33,333, I said, wow, you're right, it must be. Oops. Now you know why all margin calculations should be done by computers and not by humans! It's a good object lesson...theoretically I know what I'm doing but I still made that mistake. I've studied margin for 25 years, and I still don't always do it right. What about the clerks at ______ who have had 8 hours training in margin calculations? After a few days, I'll calm down and lose my this-is-the-first-thread-I've-ever-started anxiety and perhaps I'll be thinking more clearly. In any event, I'm thrilled to know that you and others are checking my math. I need the support and it's good practice for all of us! The reason I raised this question so early is because I've learned that many investors think that to meet a $100,000 margin call, they must sell $100,000 worth of stock. Nope, it's 3 times that much, at least. So thanks again for keeping me straight! Please keep tuned to the thread...I need your watchful eye!

To: htransport who wrote (46)	12/1/2000 2:02:08 AM
From: FNS	Read Replies (1) \| Respond to of 158

RE: <<This last spring we found ourselves in a very bad margin call because we didn't fully understand margin. In order to meet the call, we were required to either send the margin requirement as new cash or sell 3 times as much stock as the margin amount.>> Yup! and I learned the hard way... note that it all depends on the firm and particular stock! At Fidelity, for instance, selling PALM will release 60%, CS or QCOM 50%, and COMS 40%, I believe... However, selling off options first is recommended cause you release dollar for dollar! Good luck. fns

To: htransport who wrote (46)	12/2/2000 5:40:43 AM
From: Rick_Barry	Read Replies (1) \| Respond to of 158

Can someone please explain for me about the 3 times selling. I understand about use new cash to pay for margin but not the 3 times selling. I was told the same thing by my broker, lousy Datek. Here is the situation: My total portfolio value was 12K, account value was 2K and margin was 10K. I was told I must sell 3 times of stock which around 14K, I don't know how they came up with the number. Then I told Datek that I am going to send in 10K I today. They said they would liquidate my account anytime. Then two hours later they liquidated my account, so I used my 10K to buy the SAME exact stocks that they sold at at the same price. Luckily I live near TdWaterhouse so I was able to walk in their office and bought back the same shares.