# Margin Call for Short Position

You shorted a stock for \$50. Inital margin=0.40 Maintenance Margin Requirement = 0.30. At what price will you get the first margin call?

\$53.8462

50 * 1.4 / 1.3

Both of you explain, please…no formulas, just logic.

When you short a stock the margin call is above the current market price due to the fact the your equity position has declined in value. I usually just follow the formulas, thats how I learn stuff

Good stuff map1! That’s what I wanted to see to clear it in my head.

Do you want the explanation for a long position too?

Got that from you some time ago.

http://thismatter.com/Money/Stocks/selling-short.htm is also a good artical on this.

Dreary Wrote: ------------------------------------------------------- > Got that from you some time ago. Dreary, this is how i think Long position if maintainence margin is X 30, then lender is saying at any given time, you are allowed to borrow (1-X) 70% of the market value of the stock. But what you borrow to do a trade is initially determined by initial margin. So once you ascertain how much you borrowed initially, you simply say if 1-x = borrowed money; then market value = borrowed money / 1-x to get the share price, you simply divide market value / # of shares. Short position. follow as map said.

I did see that…makes sense.

for short trigger price formala = Initial price * (1+initial margin)/(1+maintaince margin) = 53.846.

for long trigger price formala = Initial price * (1-initial margin)/(1-maintainence margin) correct?