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.

BORROWING ON MARGIN INVOLVES RISK

Borrowing on margin involves risk. You must maintain the required level of equity in your account. The amount you can borrow is based on the value of cash, or investments you provide as security for your margin loan. Please read the Margin Risk Disclosure.

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
$25,000
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
20% of current market value minus out-of-money amount or 10% of strike, whichever is greater times the multiplier times the quantity
20% of current market value minus out-of-money amount or 10% of strike, whichever is greater times the multiplier times the quantity plus the market value of the option
Naked Calls
20% of current market value minus out-of-money amount or 10% of current market value, whichever is greater times the multiplier times the quantity
20% of current market value minus out-of-money amount or 10% of current market value, whichever is greater times the multiplier times the quantity plus the market value of the option
Note: Position limits are 2,000 contracts when going short and uncovered. The long position limits are determined by the exchange. 2x Leveraged ETF naked options will be replaced with 40% or 20% and 3x Leveraged ETF naked options will be replaced with 60% and 30% in the above calculations.

Option Expirations Policy

Expiring long and short option positions may be closed as early as 2:00 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.

Day Trade Buying Power Calculation

Money market funds and CIP are not applied towards calculating day trade buying power. Please contact us to have money market funds or CIP 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 or CIP 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
50% of market value
Greater of $2.50 a share or 100% of current market value
Short stock sales above $5.00 per share
50% of 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
$5 and above
minimum 50%
minimum 50%
$3.00-$4.99
minimum 75%
minimum 75%
Leveraged 3x
$5 and above
minimum 75%
minimum 75%
Below $5
100%
100%

Leveraged Short ETF Transactions

Equities
Initial Requirements
Maintenance Requirement
Leveraged 2x and above $5.00

Minimum 60%

$5 a share or minimum of 60% of market value whichever is greater
Leveraged 3x and above $5.00

Mimimum 90%

$5 a share or minimum of 90% of market value whichever is greater
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

Other Securities

Securities
Initial Requirements
Maintenance Requirement
Unit Investment Trust
100%
25%
Municipal Bonds
25%
15%
Corp Non Convertible
25%
20%
Corp Convertible
50%
30%
High Yield Bonds (below $80)
50%
40%
Corp Reverse Convertible
50%
40%
CMOs
25%
20%
IO's, PO's and Inverse Floaters
40%
30%
US Government Issues based on years to maturity
0 to less than 1 year
4%
2%
1 to less than 3 years
5%
3%
3 to less than 5 years
6%
4%
5 to less than 10 years
8%
5%
10 to less than 20 years
9%
6%
20 or more years
10%
7%

Concentrated positions on margin will hold the following requirements:

Margin accounts with any concentrated single equity position market value that exceeds the equity in the margin account will be charged 40% on the entire account.

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 four (4) business days under normal conditions. Exchange calls are due in one business day.
  • 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.

European Style Option Spreads

To be considered a spread, the long and the short side must expire on the same day. If the expiration dates are not the same the short side will be treated as naked.

Covered LEAPS Requirements

Initial Requirement: Proceeds from the sell of the LEAPS calls cannot be used to satisfy Reg-T requirements. If an account purchases stock and sells short covered LEAPS calls, the account will be required to meet the 50% initial requirement on the long stock.

Maintenance Requirement: The short market value of the LEAPS will be deducted from the equity when figuring maintenance requirements for accounts holding these positions. The value of the long stock will be valued at the price of the stock or the strike price of the option, whichever is greater.