Quote:
Originally Posted by photon
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.
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Banks are extremely smart in how they offer margin...even if you fall into a margin call you always have enough securities in order to pay it off.
Margin = Cash +Loan Value of the securities you hold
So if you are using margin (ie. negative cash balance) you go into a margin call by the price of your securities falling. But for you to actually not be able to cover the margin it would have to fall more then 30%, (the margin requirement of most blue chip Canadian Equities). And most blue chip canadian equitites don't fall 30% short term.
And you have WAY more leverage with options/margin, then you do with a house. Assuming you know how.
NM Bertuzzied beat me to it.