How can we help you?
We matched that to:
How do I calculate the margin required for a long stock purchase or short sell?
To calculate the margin required for a long stock purchase, multiply the number of shares by the price by the margin rate. The margin requirement for a short sale is the margin requirement plus 100% of the value of the security.
Margin Requirement = shares x price x margin rate percentage
Purchase 1,000 shares of a stock at $50 with margin rate of 30%. The margin requirement would be:
1,000 shares x $50 x 30% margin rate = $15,000
This is the minimum required amount + margin that must be in the account before a buy order can be entered.
Since 30% is the margin rate, TD Direct Investing is lending the account holder 70% of the trade value.
Maximum loan value is 1,000 shares x $50 x 70% = $35,000
Short sell 500 shares of a 50% marginable stock priced at $10.00. The margin requirement is 150%. Note: 100% of the margin requirement is generated from the sale of the security. Therefore, the additional initial margin requirement is 50%, the same amount required in order to accept the trade if you were purchasing the stock.
500 shares x $10.00 x 50% = $2,500
The total margin requirement to hold the position, including the 100% of the proceeds from the short sell, is calculated as follows:
500 shares x 10.00 x 150% = $7,500
(Note: TD Direct Investing does not pay interest on the cash amount that a client receives as a result of a short sale.)
Thank you for your input!
Still not finding the answers you need?
Please note that the answers to the questions are for information purposes only for the products discussed. Individual circumstances may vary. In case of discrepancy, the documentation prevails.