You just sold 1,200 shares of stock short at a price per share of $13.50. The initial margin requirement is 60% and the maintenance margin is 30%. What is your initial equity position?

Question

Quizplus · Accepted Answer

The initial equity position is calculated as the amount of money borrowed to buy the stocks plus the initial margin. Since this is a short sale, the calculation is based on the sale price of the stocks. The sale price of 1,200 shares at $13.50 per share is $16,200. The initial margin requirement is 60%, so the initial equity position is 60% of $16,200, which is $16,200 * 0.60 = $9,720.

You Just Sold 1,200 Shares of Stock Short at a Price