What is a Margin Call?
A margin call occurs when the value of your margin account falls below the broker's required minimum value (maintenance margin). When this happens, you must either deposit more cash or securities, or sell some of your holdings to bring your account back to the required level.
Understanding Margin Trading
Initial Margin
The initial margin is the percentage of the purchase price you must pay with your own money when buying on margin. The Federal Reserve's Regulation T sets this at 50% for most stocks, meaning you can borrow up to half of the purchase price.
Maintenance Margin
The maintenance margin is the minimum equity you must maintain in your margin account. FINRA requires at least 25%, though many brokers require 30-40%. If your equity falls below this level, you'll receive a margin call.
The Margin Call Price Formula
Margin Call Price = Purchase Price x (1 - Initial Margin) / (1 - Maintenance Margin)
How to Use This Calculator
Enter Purchase Price
Input the price at which you purchased the stock per share.
Enter Number of Shares
Input the total number of shares you bought on margin.
Set Margin Percentages
Enter your initial margin (typically 50%) and maintenance margin requirement (typically 25-40%).
Add Current Price (Optional)
Enter the current stock price to see your current margin status and buffer to margin call.
Calculate
Click "Calculate" to see your margin call trigger price and analysis.
Margin Trading Risks
- You can lose more money than you invested
- Brokers can sell your securities without notice
- You may have to deposit additional funds on short notice
- Interest charges on borrowed money add up over time