Assume you sold short 100 shares of common stock at $50 per share.The initial margin is 60%.What would be the maintenance margin if a margin call is made at a stock price of $60?

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Quizplus · Accepted Answer

The maintenance margin is calculated as (Equity/Market Value). Initially, you have $5,000 from the short sale and need $3,000 as initial margin (60% of $5,000). If the stock price rises to $60, the market value of the short position is $6,000. Your equity is $2,000 ($5,000 - $6,000 + $3,000). The maintenance margin is $2,000/$6,000 = 33.33%.

Assume You Sold Short 100 Shares of Common Stock at $50