Question
As of March 9, 2021, the price of GameStop Corp. (ticker: GME) is $246.90 and its closing price on March 10, 2020 is $4.23. Everyone
As of March 9, 2021, the price of GameStop Corp. (ticker: GME) is $246.90 and its closing price on March 10, 2020 is $4.23. Everyone you know believes GME is overvalued and decides to short-sell GME. You on the other hand decide to be a contrarian with a levered position by buying on margin. You have $297,128 of cash that can be used as margin and your broker requires an initial margin of 80% and a maintenance margin of 67%. Pay special attention that you cannot purchase/sell/trade fractional shares.
How much cushion (in dollars) do you have before you receive a margin call from your broker? That is, by how much the stock price could move in the "wrong" direction before you receive a margin call? Enter a number with two decimal points.
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