Effect on margin of a cash withdrawal
I have a Reg-T margin account with Interactive Brokers. I would like to confirm my assumptions about the effect that making a cash withdrawal on margin would have on the account.
Let's say I have 0 worth of securities in the account; all of it paid for with my own cash (no margin balance), and cash balance of [CO]. Under these parameters, IB shows:
Maintenance margin of
Buying power of 0
Excess liquidity of 0
Let's say I withdrew 0 in cash from the account. Because my previous cash balance was [CO], that effectively means that the whole 0 is being borrowed on margin. How would that affect the numbers above?
Ultimately, what I'm trying to figure out is by how much the 0 in securities in the account would have to come down in value before triggering a margin call because of the 0 loan.
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You can disregard the Buying Power number because that relates to the 4X intraday margin that a Pattern Day Trader is allowed. The PDT requirement is k account value and this is only a 0 account.
What you are suggesting amounts to buying 0 worth of stock with 0.
The account value level at which a margin call will be triggered is:
Account Value = (Margin Loan) / (1 – Maintenance Margin %)
If the maintenance level is 25% then the Maintenance Requirement is 4/3 x the Debit Balance. In your example, 4/3 of 0 would be 3.33. This level would be reached after you lost 1/3 of your position's value (1/3 x 0). The numbers would look like this:
Market Value Loan Equity Margin %
200.00 100.00 100.00 50% (initial position)
133.33 100.00 33.33 25% (after 1/3 drop)
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