Question
Suppose we short 100 shares of a stock at $50 a share using 80% margin. If the initial margin is 50% and the maintenance is
Suppose we short 100 shares of a stock at $50 a share using 80% margin. If the initial margin is 50% and the maintenance is 30%, determine whether we will receive a margin call when the price is at $70. If yes, how much money do we need to put in assuming we need to pull back to the initial margin level?
USE this formula: Total Deposited Funds - Funds Needed to buy back the shares/ Funds Needed to buy back the shares
5000+X - 5000/5000 how to solve for X? Please explain using the above formula and show steps. Will upvote for correct guidance. Thank You.
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