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What is Portfolio Margin?

What is Portfolio Margin?

What is Portfolio Margin?

Portfolio margin is a risk-based margin policy that allows qualifying US investors to secure up to 6.67 times the margin they would normally have access to in a regular margin account. This allows for leverage of up to 6.6-to-1 for stock positions, which is higher than the 2-to-1 leverage limit set by Regulation T. However, trading with more leverage also increases the risk of loss, so portfolio margin requirements are calculated in real time. 

Portfolio margining provides a more accurate representation of potential losses by analyzing the overall risk of a portfolio. This increased leverage can give traders more buying power and potentially allow them to take advantage of more trading opportunities. However, if things don’t go as planned, trading with more margin can have serious consequences for a trader’s capital. 

Portfolio margin is calculated by using theoretical option pricing models to determine potential real-time losses at various price points for each position. The maximum expected single day loss from these price moves is then aggregated to determine the overall margin requirements for the portfolio.

Unlock More Buying Power

With Portfolio Margin, you can do more with less. By calculating margin requirements based on the net risk of your entire portfolio, rather than individual positions, the account is able to unlock more buying power and take advantage of more opportunities in the market.

By using advanced risk models, portfolio margining provides traders with increased buying power and more accurate risk assessments. To see how our clearing firm calculates the risk, ask us to email you the Portfolio Margin Risk Calculation Guide

Am I eligible? 

Portfolio margin requirements include a minimum account size, and an assessment of the account to determine its eligibility for portfolio margining. Clients must have $500,000 initial minimum account equity to be eligible for Portfolio Margin.

To check your eligibility and to apply for Portfolio Margin - Contact Us

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