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To: margin_man who wrote (20589)	2/11/1998 9:47:00 PM
From: porcupine --''''>	Read Replies (1) \| Respond to of 36349

<< Are my calculations correct? >> I don't believe so. You forgot to add the $50,000 options purchase to your total market value. This brings the sum to $200,000, which means that your equity has returned to 50%. Look at it this way: If your market value rises $50,000 above the 50% equity mark, they will, if you request, mail you a check for the $50,000. Since you could just turn around and mail it back to them with a written order to purchase $50,000 worth of options, why wouldn't they just execute the order without the roundtrip to the US Post Office --???>

To: margin_man who wrote (20589)	2/11/1998 10:33:00 PM
From: Greg Thornton	Read Replies (2) \| Respond to of 36349

Patriot, I think you were right in the first place: Total portfolio: 100,000 Equity: 50000 --> Margin: 50000. So this is 50% equity. Say the stock goes up, so your equity goes up another 50000. And the account will look like this: portfolio value: up to 150000 equity: up to 100000 ----> Margin: still 50000 Assuming you can't borrow below 50% margin, you can either borrow $50K for marginable securities or $25K for cash, options, etc. (non-marginable). If you buy $50K of marginable securities, the account now looks like this: portfolio value: up to 200000 equity: still 100000 ----> Margin: up to 100000 margin percentage = 50% but if you buy options, or take the money out in cash: portfolio value: still 150000 equity: now 75000 ----> Margin: up to 75000 margin percentage = 50% So the available margin goes up dollar for dollar for marginable security purchases only, but $.50 per dollar for cash transactions. Right? Greg