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To: LTBH who wrote (3788)	4/21/1998 3:29:00 PM
From: steve goldman	Read Replies (2) \| Respond to of 12617

Networm, You understanding of the regulations seems accurate. Nonetheless, I cannot comment on your hypotheticals as they were not clearly stated... " With a given $12K cash and holding the max position in one stock; I will have $6K in maint excess and a $12K stock position. In other words, a day trader fully positioned in one stock is not leveraged any more than a straight cash position. Margin leverage for a day trader only becomes efficient when holding 4 or more equal positions. Additional Considerations: Do house rules on maintenance excess for concentrated positions generally cause a more diluted position than outlined? If so, what is the range? If the maintenance excess is held in a bond mutual fund purchased through the broker, is the full actual fund account value applied? If derated, by what amount? " I do not understand what you are asking. Please restate or if someone understands what networm is trying to present, please do so for networm. Regards, Steve@yamner.com

To: LTBH who wrote (3788)	4/21/1998 10:09:00 PM
From: Dominick	Read Replies (1) \| Respond to of 12617

Networm: Here's my understanding of margin. $12,000 cash @50% margin buys $24,000 of stock. (12/.50 Reg T) Therefore, $24,000 CMV (current market value of stock) -$12,000 DB (Debit Balance) the money your borrowing from broker. _____________ =$12,000 EQ (Equity) your money. -$12,000 Reg T (50% of CMV or $24,000). ___________ = 0 EE (Excess Equity) INCREASE IN MARKET VALUE: $30,000 CMV (stock increased in value) -$12,000 DB (you still owe $12,000 you borrowed). =$18,000 EQ Equity(yours) -$16,000 Reg T (50% of CMV) =$2,000 EE (excess equity) otherwise known as SMA(special memorandom Account) No cash in it just an account memo. Excess Equity divided by Reg T (50%) = buying power. Therefore, $2,000 divided by .50 = $4,000 of buying power. This means you can buy $4,000 more of stock. MAINTAINENCE CALLS: The Feds set it a 25%, but brokerage houses can set it higher for safety but can not reduce it below 25%. Normally they use 30%. The following formula can be used to calculate how low the value of securities can go before you get a margin,(maintenance),call. Using 30%. DB(debit balance) divided by 70%. Therefore, $12,000(amount you borrowed) divided by .70 = $17,142.86. Your CMV(current market value,$24,000)can go as low as $17,142 before Equity falls below 30% of minimum maintenance requirement. $17,142 (100% of CMV) -$12,000 DB,(amount you borrowed) 70% of CMV =$5142 EQ(yours), 30% of CMV (maintenance call below this figure) Normally there is no margin if you close out all trades the same day. Hope I didn't drive you over the edge. Dominick