Margin Guidelines

Regulations dictate the amount of cash or equity that must be deposited and maintained as collateral against your margin loan. The amount you can borrow on margin toward the purchase of securities or for personal use is typically limited to 50% of the value of marginable securities in your account. However, the market price of the security must generally be above $3.00 per share and may not be a pink sheet or bulletin board stock.

Your buying power and cash available may fluctuate with the value of your securities from day to day. Margin is available, subject to approval, on most brokerage accounts with the exception of IRAs and Custodial accounts.

Equities

Minimum Equity Requirements to Use Margin

A combination of:	Minimum:
Cash/Marginable Securities	$2,000
Short Sales of Equities	$2,000
Cash/Options/Stock	$2,000
Margin/Options/Stock	$2,000 in Marginable Securities or Cash

Note: Long option purchases have an initial and maintenance margin requirement of 100%. For spreads and uncovered options, please see Margin Minimum Equity Requirements below. To open an Investrade margin account, you must have at least $2,000 in cash or marginable securities in your account. Additional requirements may apply depending upon specific transactions and positions in your account.

Options

Minimum Equity Requirements to Trade Certain Option Strategies

A combination of cash and marginable securities:	Minimum:
Spreads	$2,000
Equity and Index Spreads	$2,000
Spreads in an IRA	$2,000, Cash Only
Uncovered Options:
Naked Puts	$20,000
Naked Calls	$100,000
Naked Index	$500,000

Note: At this time, we do not allow margin borrowing on cash secured short puts, short calls, naked or spread positions.

 

Marginable Option Transactions

Option Type	Initial Requirement	Maintenance Requirement
Naked Puts	30% of current market value minus out-of-money amount or 15% of strike, whichever is greater times the multiplier times the quantity	30% of current market value minus out-of-money amount or 15% of strike, whichever is greater times the multiplier times the quantity plus the market value of the option
Naked Calls	30% of current market value minus out-of-money amount or 15% of current market value, whichever is greater times the multiplier times the quantity	30% of current market value minus out-of-money amount or 15% of current market value, whichever is greater times the multiplier times the quantity plus the market value of the option

Note: A minimum of $0.50/share (1 contract = 100 shares) will be held for any naked calls or puts. Position limits are 2,000 contracts when going short and uncovered. The long position limits are determined by the exchange.

Option Expirations Policy

Expiring long and short option positions may be closed as early as 3:00 PM EST on the last trading day prior to expiration if you do not have the funds or buying power to buy or short the underlying security. Please note that you may still get assigned even if a short option is out of the money. Therefore, if there is risk to the account, short options may be closed out even if it is out of the money. The firm may close out your positions without prior notice. We may also elect not to exercise or close the resulting stock position in the aftermarket hours on Friday or pre-market hours on Monday.

Short Option Day Trades

Short option day trades executed by pattern day traders (PDT) will be subject to naked requirements unless an intraday hedge exists. If the option is classified as “hedged” or “strategy,” the greater of the net premium of the strategy requirement will be charged.

The following strategies qualify as an intraday hedge for the purpose of day trade calculations:

• Debit spreads
• Credit spreads
• Box spreads
• Long and short butterflies including calendar butterflies
• Calendar spreads
• Condors including calendar condors
• Long and short iron butterflied including calendars
• Covered calls and puts

Money market funds are not applied towards calculating day trade buying power. Please contact us to have money market funds journaled to the margin type prior to the effective date if you would like to use all funds to calculate day trade buying power. Also, please note it is necessary to shut off sweeps to money market upon trade settlement in order to use all available funds to day trade without interruption. This request must be in writing with a signature.

Margin Account Maintenance and Initial Requirements

Stock Transactions

Stocks	Initial Requirements	Maintenance Requirement
$5.00 and above	50%	30%
$4.99 to $3.00	50%	50%
$2.99 and below	100%	100%

Short Stock Transactions

Stocks	Initial Requirements	Maintenance Requirement
Short stock sales below $3.00 per share	Not allowed	Greater of $2.50 a share or 100% of current market value
Short stock sales below $5.00 per share	Same as maintenance requirement	Greater of $2.50 a share or 100% of current market value
Short stock sales above $5.00 per share	Greater of $5.00 a share or 50% of current market value	Greater of $5.00 a share or 30% of current market value

Leveraged Long ETF Transactions

Equities	Initial Requirements	Maintenance Requirement
Leveraged 2x	50%	50%
Leveraged 3x	75%	75%
$2.99 and below	100%	100%

Leveraged Short ETF Transactions

Equities	Initial Requirements	Maintenance Requirement
Leveraged 2x and above $5.00	Same as maintenance	Greater of $5.00 a share or 60% of current market value
Leveraged 3x and above $5.00	Same as maintenance	Greater of $5.00 a share or 90% of current market value
Short sales below $5.00	Same as maintenance	Greater of $2.50 a share 100% of current market value
Short sales below $3.00	No allowed	Greater of $2.50 a share or 100% current market value

Concentrated positions on margin will hold the following requirements:

• If the Percentage of Net Absolute Value is greater than 50%, the requirement is 50%.
• If the Percentage of Net Absolute Value is between 35% and 49.99%, the requirement is 40%.
• If the Percentage of Net Absolute Value is between 25% and 35%, the requirement is 35%.

Note: Percentage of Net Absolute Value = The absolute value of a single marginable position held in a margin account, then divided by the sum of the absolute value of all marginable equities (not including bonds and mutual funds) in a margin account.

Initial Requirements for Options

• Covered Calls: Requires a long stock position equal to the amount of exercisable calls.
• Debit Spreads: $2,000 minimum equity plus 100% of the debit amount, upon initiating the transaction.
• Credit Spreads: $2,000 minimum equity plus 100% of the difference between the strike prices, multiplied by the number of contracts.

Important Guidelines

• Required Market Price for Stocks:Most stocks traded on major U.S. exchanges and Nasdaq-listed securities priced $3.00 and above are eligible for margin borrowing. Please note that some stocks including Pink Sheets or Bulletin Board Stocks are not eligible for margin borrowing.
• Minimum Market Price for Stocks: Stocks priced under $3.00 are not eligible for credit towards margin requirements and are not credited to margin buying power.
• Mutual Funds: Most mutual funds can be used as collateral, provided they've been held for at least 30 days Please note you cannot purchase mutual funds on margin.
• Bonds: Most corporate, treasury, municipal, and government agency bonds are eligible for margin borrowing. Margin ability and margin requirements are subject without advance written notice to change based on liquidity, bond ratings, concentrations, and other risk factors.
• Money market funds, certificates of deposit (CDs), annuities, and options are not available as collateral for margin borrowing.
• Maintenance Calls: Maintenance calls are due in three (3) business days under normal conditions.
• House Required Minimums: If equity drops below house required minimum, or a call is issued for any other reason, you may be required to immediately sell securities or deposit additional funds promptly.
• Concentrated Accounts: Margin maintenance is higher for concentrated accounts and requirements may vary per security.
• Margin Maintenance: Margin maintenance ranges from 30% - 100% depending on the particular securities in an account.
• Increased Maintenance Requirements: From time-to-time, we may be required by our clearing firm to increase maintenance requirements due to overall firm concentration, or unusual market conditions. We further reserve the right to increase the requirements at our sole discretion.

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The information on this web site is for discussion and information purposes only. All accounts accepted at the discretion of Investrade which accepts customer orders only on an unsolicited basis, and does not make any recommendations regarding any security or securities product with the possible exception of orders executed by our full service bond desk. Nothing contained herein should be considered as an offer to buy or sell any security or securities product. Online trading has inherent risks due to loss of online services or delays from system performance, risk parameters, market conditions, and erroneous or unavailable market data.