Margin and Margin Requirements
Margin
An investor is borrowing on margin when he borrows money from a brokerage house to cover part of the purchase of a security.
Margin Requirement (stocks)
The Federal Reserve Board sets the margin requirement, which is the maximum percentage of the investment that can be loaned by the brokerage firm.
Margin Requirement (options)
For options, the margin requirement is the amount that an uncovered options writer must keep on deposit in his account to cover the naked option position. The margin requirement is updated daily, based on current prices.
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