Options positions do not receive any credit or loan value against the securities held and therefore must be fully paid with cash.
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Questrade client margin accounts generally receive 3:1 margin on eligible securities.
Buying power is set each morning based on your cash balance, less margin charges on
positions held overnight. In order to receive margin you must maintain at
least the equivalent of US$1000. Questrade does not enforce US style pattern day
trading rules.
Margin requirements on stocks and options positions held overnight:
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Maintenance requirement (MR) is the minimum equity required in a margin account. The MR is calculated by taking the market value (MV) of each security in your account that is marked to the market, and multiplying it by either the minimum maintenance requirement or the higher house maintenance requirement percentage (HMRP- listed below) when applicable.
Higher house maintenance requirement percentage (HMRP) Low volume volatile = 75% (sum> margin equity) Volatile = 50% (sum > margin equity) Concentrated- = 40% (on the market value of all margin positions |
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A concentrated position is created when the market value of one position is greater than the equity in the account.
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In non-concentrated accounts that are holding non-volatile short stock (selling at $5.00 per share or above), the maintenance requirement will be the higher of 30% of the current market value or $5 per share.
Note: Short stocks selling for less than $5.00 a share will be held at 100% of the |
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For each concentrated account holding a short stock that is selling at less than $5.00 per share, the maintenance requirement will be either the higher of 100% of the current market value or $2.50 per share.
For each concentrated account holding a non-volatile short stock that is selling at $5.00 per share or above, the maintenance requirement will be either the higher of 40% of the current market value or $5.00 per share. For each account holding a volatile concentration (where the sum of all long and short volatile stocks is greater than the margin equity in the account), then for any volatile short stock that is selling at $5.00 per share or above, the maintenance requirement will be the higher of 50% (75% for low volume volatile positions) of the current market value or $5.00 per share. Important note: concentration occurs when the market value (market value = share size x current price) of a single position is greater than the margin equity in the account. Concentrated positions have higher house maintenance requirement percentages than non-concentrated positions. Non-volatile concentrated positions cause the entire portfolio to be held at 40% maintenance instead of minimum maintenance percentage above. |
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A volatile concentration occurs when the sum of all long and short volatile stocks is greater than the margin equity in the account. This affects you in that the positions which create the volatile concentration are held at the higher HMRP of 50% (75% for low volume volatile positions) with the rest of the portfolio (non-concentrated positions) held at the higher of 30% or $5.00 per share for short positions. However, if a volatile concentration occurs and the account also holds a concentrated position (either volatile or non-volatile), the volatile position(s) will be held at 50% (75% for low volume volatile positions) maintenance and all other positions will be held at 40% maintenance.
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Maintenance margin calls are issued the following business day. Clients are generally provided three business days to cover maintenance margin calls. They may be covered by either providing additional funding or reducing open positions. Maintenance margin calls may be enforced the same day if the account has negative equity or if the call is greater than $25,000.
Margin is provided at the discretion of Questrade Inc. and may be withdrawn at any time for any reason. Questrade reserves the right, at their sole discretion, to reduce positions unilaterally to meet maintenance margin calls at any time. Questrade reserves the rights to enforce more stringent requirements at our sole discretion. |
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NOTE: There are significant risks when trading on margin. For more information on Canadian regulatory margin requirements please refer to the Investment Dealers Association ("IDA") rule book (regulation 100). Prior to trading options please review the Questrade's account agreements & disclosures document.
