Wednesday, June 14, 2017

equities - % Drawdown on Stock Portfolio to hit Margin Call


Margin requirement is industry standard at 30% of total portfolio (cash + margin loan)


e.g. You have 600k in equities purchased with cash and 400k in equities purchased on margin loan. The total portfolio is $1mil. The maintenance requirement is 600k + 400k = 1mil(30%) = 300k.


However, if your portfolio draws down 20% to 800k, the maintenance requirement also goes down to 800k(30%) = $240k


I'm looking for a formula where I can know what % drawdown my portfolio can handle until it hits a margin call.



I hope I explained that correctly, and thank you!




No comments:

Post a Comment

technique - How credible is wikipedia?

I understand that this question relates more to wikipedia than it does writing but... If I was going to use wikipedia for a source for a res...