Can someone confirm this 1) While trading stocks/securities on Margin, if your margin balance drops below mantainence margin, you bring it back to the **MANTAINENCE MARGIN** level. 2) If you have a position in Futures, you post the required initial margin with the clearinghouse and in subsequent days if the price moves against you and and your margin balance falls below the mantainence margin balance, you need to bring it back to **INITIAL MARGIN** level.
And – 1. Margin on stocks is also knows as Margin loan 2. where as Margin on Futures is performance guarantee.
That is correct. It is one of the big differences. To add to what goel_ar has written above, you would pay interest on the Margin “loan” in Securities/Equities (this is money borrowed from the broker), while in exchange traded futures it is a guarantee paid to the clearinghouse and has to be built back up to the same level every time it falls below that INITIAL LEVEL. CP
you do post a margin for shorting a stock correct?
yes. both sides short and long have to post margin in the case of equity. In options which are exchange traded - only the seller on a naked option has to post margin as a guarantee that he is in a position to deliver the asset (Call) or deliver the funds (Put).