GrantTheFan LSU Fan Baton Rouge Member since Nov 2010 240 posts
re: Margin Call (Posted on 5/17/13 at 8:32 pm to Doc John)
You borrow the money to buy the stock(s). Most brokerages have some minimum account value threshold before they'll allow you to have margin privileges. There can be varying levels of margin allowed, but it's generally a 30% minimum, so for example if you have 10k in equity, you can margin up to 7k of purchases. If the stock(s) drop in value below that threshold, the brokerage will give you a margin call, meaning to have X amount of time to deposit cash into the account or they will sell enough of your stock(s) to meet that margin call.