Margin call price
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Calculator · Margin & Leverage
Margin call calculator
Enter the shares, the price, the loan or the cash behind a short, and the maintenance requirement. The margin call calculator returns the price where equity hits the floor, how far the stock has to move to get there, and your equity as a share of the position today.
Move to the call
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Current equity
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The working
The formula behind the call price
On a long position the loan stays put while the shares move. Equity is market value minus the loan, and the call arrives once equity drops below the maintenance percentage of market value. Set the two equal and solve for price: call price = loan / (shares x (1 - maintenance)). Buy 400 shares at $50 with a $10,000 loan under a 25% requirement and the answer is 10,000 / 300, or $33.33. The stock can lose a third of its price first.
A short runs in the opposite direction. The sale proceeds and the cash you deposited form a credit balance that stays fixed as the price moves, and your equity is that credit minus what it would cost to buy the shares back, so the danger is a rally: call price = credit / (shares x (1 + maintenance)). Short 200 shares at $40 with $4,000 posted and the credit is $12,000. At 30%, the call sits at $46.15. That is a rise of about 15%. The case for treating every short as borrowed money is made in every short sale is a margin trade.
Reading the result
The move to the call is the percentage change from the price you entered to the call price. Hold it up against how far the stock travels in an ordinary bad week. A 12% cushion on a stock that often drops 15% after an earnings report is a call with no date on it yet. Current equity shows where the account stands today. At 50%, a long sits at the Regulation T starting point set by the Federal Reserve Board, and the distance down to the maintenance figure is your room. Maintenance margin explains the floor itself, and how to avoid a margin call covers the ways to widen the gap.
Where your broker's figure differs
FINRA Rule 4210 puts the minimum for long stock at 25% of market value. For a short in a stock priced at $5 or more, the minimum is the greater of $5 a share or 30% of market value. Firms may set higher house requirements. Enter the percentage in your own margin agreement. Brokers also measure the whole account at once: other positions, cash, accrued interest and dividends owed on a short all shift the real trigger, and the firm can sell without calling you first. The calculator looks at one position at a single rate. What a broker can do once a margin call is issued picks up from there.
Questions about this calculator
Why is the margin call price on a short above the sale price?
A short loses money as the stock rises, so equity shrinks on the way up. The credit from the sale and your deposit stays fixed while the cost of buying the shares back grows with the price. The call comes at the price where that credit covers the buyback plus the maintenance percentage of the current value.
Which maintenance percentage goes in the box?
Use the figure in your margin agreement or on the firm's requirements list for that particular stock. FINRA's 25% for long stock is a minimum. Firms often ask for more on volatile, low-priced or concentrated holdings, and they can raise the requirement on a position you already hold.
Does a margin call mean the position gets closed?
A call is a demand to bring equity back above the requirement, usually by depositing cash or securities or by selling part of the position. Margin agreements generally let the firm sell holdings without waiting for you if equity keeps falling, and it picks which positions to sell.
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