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Old 08-26-2008, 12:39 PM   #328
Bertuzzied
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Quote:
Originally Posted by photon View Post
Except they usually won't margin call your house. The bank really doesn't want to end up owning a ton of houses to deal with. As long as you make your mortgage payments.

Not sure how a margin call works for trading though.
If your stock falls below a certain price you will be in a margin call.

Like the RIMM example. 70% loan value. You buy $100k worth of stock at $100/share with $30k. Well in real life you wouldn't really do that because you will be at your margin max. So if your Rimm shares falls a penny below $100 you will be in a margin call.

If your share price goes up though your margin balance will increase too.

Also the $70k you are borrowing is charged interest. Usually prime or prime +1, but you can write it off.

Last edited by Bertuzzied; 08-26-2008 at 12:41 PM.
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