Margin HOT SHEET (Greico Financial Training)

LONG MARGIN
Long Market Value: The Market Value of the Securities you hold in your account, given to you in the
question
REG T: A Rule by the federal reserve that saids a customer must put down 50% of the market value to
open a position on margin. (Basically if the customer puts up half, the BD can lend the other half.)
Debit Balance: The amount owed to the Broker dealer by the customer
Equity: the amount of the positions the customer would walk away with if they cashed out their
positions. In a long margin account, Equity is the market value the Debit balance.
SMA: A credit line issued by the broker dealer in excess of 50% equity. To calculate SMA take Equity
the market value (although if the calculation is below an existing SMA amount, then SMA DOES NOT go
down. Only use of SMA by spending buying power will reduce SMA) You only lose it when you use it
Buying Power: The amount of securities you can buy using your SMA (borrowing $ instead of depositing
more money in your account) its 2x the SMA
Restricted Account: An account below 50% equity is restricted which means you may only withdraw 50%
of the SMA from the account (usually you can withdraw all your SMA as cash from the account)
Minimum Maintenance: If you account goes below FINRAs maintenance requirements, the customer
will have to pay a margin call big enough to bring the account back up to maintenance (pay the amount
in cash, or double in marginable securities) Long Maintenance is 25% equity.
How low can the market value go before a margin call: To calculate below what price a customer would
get a margin call Debit Balance * .75
How low can the equity go: to calculate how a customers equity can go based on the current market
value Market Value * .25






Short MARGIN
Short Market Value: The Market Value of the Securities you are short in the account (securities you
borrowed and sold, and must later buy back to replace), given to you in question
REG T: A Rule by the federal reserve that saids a customer must put down 50% of the market value to
open a position on margin. (Basically if the customer puts up half, the BD can lend the other half.)
Credit Balance: The amount of cash you have at the broker dealer which will be the sum of the proceeds
from the short sale and Reg T deposited. (This money must later be used to buy back the stock you
borrowed)
Equity: the amount of the positions the customer would walk away with if they cashed out their
positions. In a short margin account, equity is the credit balance the market value (the cash youd have
left after buying back the stock you borrowed).
SMA: A credit line issued by the broker dealer in excess of 50% equity. To calculate SMA take Equity
the market value (although if the calculation is below an existing SMA amount, then SMA DOES NOT go
down. Only use of SMA by spending buying power will reduce SMA) You only lose it when you use it
Selling Power: The amount of securities you can short using your SMA (borrowing $ instead of
depositing more money in your account) its 2x the SMA
Restricted Account: An account below 50% equity is restricted which means you may only withdraw 50%
of the SMA from the account (usually you can withdraw all your SMA as cash from the account)
Minimum Maintenance: If you account goes below FINRAs maintenance requirements, the customer
will have to pay a margin call big enough to bring the account back up to maintenance (pay the amount
in cash, or double in marginable securities) Short Maintenance is 30% equity.
How low can the market value go before a margin call: To calculate below what price a customer would
get a margin call Credit Balance / 1.3
How low can the equity go: to calculate how a customers equity can go based on the current market
value Market Value * .3






Other Margin Rules
Minimum Deposit for NEW Margin Account: The minimum that can be deposited in a New Margin
account (so if a new margin account and Reg T is less than the minimum, deposit the minimum, for
EXISTING ACCOUNT you just deposit Reg T).
LONG ACCOUNT: The Lesser of $2000 or 100% of the Purchase
SHORT ACCOUNT: Always $2000
Options: Options are not marginable so you cant pay margin calls with options. You can buy options in a
margin account but you must pay the premium in full. (In case, you can buy LEAP options by only
depositing 75% of the premium)
New Issues: New Issues securities are not marginable for the first 30 days from issue (all mutual funds
are always new issues, keep that in mind)
Shorting Cheap Stock (Simplified Version): If you short stock $10 or less
$0-$5: Maintenance is 2.50/share
$5-$10: Maintenance is $5.00/share
Leveraged ETFS: If buying/selling Leverage ETFS on margins, the maintenance requirement is multiplied
by the amount of leverage the ETF utilizes. (Example: If you buy a 200% levered ETF, the maintenance
requirement is double the usual 25% making it 50%)
Day Trading: Minimum Equity for Day trading is 25,000 and buying power is 4x SMA not 2x SMA
Portfolio Margin: Risk based margin accounts, must have at least $100,000 of equity in the account.
Buying puts against your stock or calls against your shorts will result in lower margin requirements due
to lower risk.