Liquidating margin

Posted by / 14-Jul-2015 18:44

Liquidating margin

Should losses on open positions reduce the funds in your trading account to 0, you would receive a margin call for the 0 needed to restore your account back to the initial

Should losses on open positions reduce the funds in your trading account to $700, you would receive a margin call for the $300 needed to restore your account back to the initial $1,000.If there were not excess funds in the account in order to bring the initial amount back up to $1,000, that position would create a margin call, a situation in which the account would need to be either immediately met with additional funds or the position liquidated to cover the margin call.Variation margin: The variation margin or maintenance margin is not collateral, but a daily offsetting of profits and losses.

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Should losses on open positions reduce the funds in your trading account to $700, you would receive a margin call for the $300 needed to restore your account back to the initial $1,000.

,000.

Premium margin: The seller of an option has the obligation to deliver the underlying of the option if it is exercised.Types of margin requirements: Current liquidating margin: The current liquidating margin is the value of a securities position if the position were liquidated now.In other words, if the holder has a short position, this is the money needed to buy back; if he is long, it is the money he can raise by selling it.This was one of the major contributing factors which led to the Stock Market Crash of 1929, which in turn contributed to the Great Depression, a troubling financial time in the 1930s.Illustration: Assume that the initial margin required to buy or sell a particular commodity contract is

Premium margin: The seller of an option has the obligation to deliver the underlying of the option if it is exercised.

Types of margin requirements: Current liquidating margin: The current liquidating margin is the value of a securities position if the position were liquidated now.

In other words, if the holder has a short position, this is the money needed to buy back; if he is long, it is the money he can raise by selling it.

This was one of the major contributing factors which led to the Stock Market Crash of 1929, which in turn contributed to the Great Depression, a troubling financial time in the 1930s.

Illustration: Assume that the initial margin required to buy or sell a particular commodity contract is $1,000 and the maintenance margin requirement is $750.

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Premium margin: The seller of an option has the obligation to deliver the underlying of the option if it is exercised.Types of margin requirements: Current liquidating margin: The current liquidating margin is the value of a securities position if the position were liquidated now.In other words, if the holder has a short position, this is the money needed to buy back; if he is long, it is the money he can raise by selling it.This was one of the major contributing factors which led to the Stock Market Crash of 1929, which in turn contributed to the Great Depression, a troubling financial time in the 1930s.Illustration: Assume that the initial margin required to buy or sell a particular commodity contract is $1,000 and the maintenance margin requirement is $750.

,000 and the maintenance margin requirement is 0.

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To ensure he can fulfill this obligation, he has to deposit collateral.

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