What is a Margin Call?

A margin call occurs when the value of your margin account falls below the broker's required minimum value (maintenance margin). When this happens, you must either deposit more cash or securities, or sell some of your holdings to bring your account back to the required level.

Understanding Margin Trading

Initial Margin

The initial margin is the percentage of the purchase price you must pay with your own money when buying on margin. The Federal Reserve's Regulation T sets this at 50% for most stocks, meaning you can borrow up to half of the purchase price.

Maintenance Margin

The maintenance margin is the minimum equity you must maintain in your margin account. FINRA requires at least 25%, though many brokers require 30-40%. If your equity falls below this level, you'll receive a margin call.

The Margin Call Price Formula

The margin call price is calculated as:

Margin Call Price = Purchase Price x (1 - Initial Margin) / (1 - Maintenance Margin)

How to Use This Calculator

1. Enter the price at which you purchased the stock
2. Enter the number of shares you bought
3. Enter your initial margin percentage (typically 50%)
4. Enter your maintenance margin requirement
5. Optionally enter the current stock price to see your current margin
6. Click "Calculate" to see your margin call trigger price

Margin Trading Risks

• You can lose more money than you invested
• Brokers can sell your securities without notice
• You may have to deposit additional funds on short notice
• Interest charges on borrowed money add up over time