Take advantage of portfolio margin and increase your buying power with up to 6.7 times more leverage than a standard margin account. Qualified investors that have a $125,000+ portfolio and meet our minimum requirements are able to use portfolio margin to invest more capital, potentially better weather market events, diversify their portfolio, and potentially yield greater returns. It's important to remember that with the opportunity for greater returns also comes the risk of greater losses.
The goal of portfolio margin is to set margin requirements that reflect net risk, which may allow our clients to benefit from lower margin requirements and more effective use of capital. Unlike traditional margin loans, which automatically require you to fund a set percentage of the investment, it aligns requirements with your portfolio’s overall risk based on the net exposure of all positions, not just on individual ones. That often means that a well-hedged portfolio can require a much lower buy-in; however, you must maintain $100,000 net liquidating value in your account to remain eligible. Here's how maintenance requirements are calculated:
1. We create a range of theoretical price changes across your margin account: between -15% and +15% for stocks and options positions and -12% and +10% for large and small cap broad based indices.+
2. The range is divided into ten equidistant points, and the gain/loss on the entire position is calculated at each of the ten points (scenarios).
3. For options, we use two methods to dynamically incorporate implied volatility (IV) into the risk array (sticky strike vs. sticky delta).
4. Finally, we calculate your greatest possible loss on each scenario, which becomes your margin requirement.
Diversified Stock Portfolio
Short Iron Condor
Portfolio margin can be a great resource for people who want more investing flexibility. Before you get started, keep these details in mind.