Maybe this could be handy: 33%=[1.33]-1=[1/(0.75)]-1=[1/(1-maintenance)]-1
One of the next questions is: why did the broker choose the 33% mark, but not another number?
Margin Question. How much buying power if holding all SPY in an account?
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Maybe this could be handy: 33%=[1.33]-1=[1/(0.75)]-1=[1/(1-maintenance)]-1
One of the next questions is: why did the broker choose the 33% mark, but not another number?
Maybe another question one would ask: At -33% mark, how much would the broker ask in cash , or how much would the broker's robots sell to answer the margin call?
If you buy 50k worth of SPY, you will have 25k left to trade. If you max out your account and buy 100k worth of spy, that will take up 50k in cash and 50k in margin leaving you with no money to trade.
You would have $200K of DTBP if you didn't hold SPY, but since you hold $50K of SPY, then you would have $150K of DTBP left.
Maverick & Nillionaire, you are giving me 2 different answers.
Let me try yet again to explain what I am saying.
Lets say I have a daytrading margin account & buy tomorrow $50k of SPY. I then withdraw any remaining cash so the only thing in the account is the SPY position with $0 in cash. I keep the account like that for a month. In January, lets say the value of SPY is the same $50k as it was when I bought it & I still have $0 in cash in the account. How much daytrading buying power would a broker give me in that account where I only have the SPY position?
Let me try yet again to explain what I am saying.
Lets say I have a daytrading margin account & buy tomorrow $50k of SPY. I then withdraw any remaining cash so the only thing in the account is the SPY position with $0 in cash. I keep the account like that for a month. In January, lets say the value of SPY is the same $50k as it was when I bought it & I still have $0 in cash in the account. How much daytrading buying power would a broker give me in that account where I only have the SPY position?
Also, would I have to pay any margin interest in that scenario if I am only daytrading (no overnight holds) except for obviously that forever longterm SPY position.
I am looking to have an account with all SPY in it instead of cash & seeing how much daytrading buying power I could have to buy other stocks during the day. I am hoping I can do all of that without paying any margin fees since I wont be holding the trading positions overnight, just the longterm SPY that will be in there forever.
Just ask your freaking broker.
Jeez, this is getting more complicated by the minute. If you fund an account with 50k in "cash" and put exactly 50k into SPY, you will have 25k of that cash go towards spy and the broker will lend you the other 25k and CHARGE you interest. You will also have 25k in cash which is still marginable. With that remaining 25k, you will be able to daytrade 100k with it or hold another 50k overnight. But you will pay interest on the 25k you are borrowing. And if you are leveraged completely, any drop in SPY will trigger a margin call and possible auto liquidation. In other words, it's a bad idea. You generally don't want to borrow against volatility which is why people use to fund their accounts with cash debt instruments, not an index.
+1!