Why does the call come at a smaller fall than I expected?

Because the loan does not shrink. As the position loses value, all of the loss comes out of your equity, so your equity share falls faster than the price does.

InvestmenttradingUnited States only

Margin Call Calculator

The price at which a leveraged position triggers a margin call. The gap between initial and maintenance margin is your entire cushion, and it is smaller than most people expect.

Also called: margin calculator, maintenance margin.

Price that triggers a margin call

$66.67

A call at $66.67, which is 33.33% below your entry of 100. At that point your equity has fallen to the 25% maintenance level.

Fall from entry to the call

33.33%

Position value

$100,000.00

Your equity

$50,000.00

Borrowed

$50,000.00

Equity when the call comes

$16,666.67

How this is calculated

An estimate, not an offer or a guarantee. Projected returns assume the rate you entered holds for the whole term, which no market does.

Method and background

This is what the calculation gives for the numbers you entered. It is an estimate, not advice, and it knows nothing about your situation beyond those numbers. Rules for United States change on a published schedule; the effective date is shown on every rule-based tool.

How this is calculated

A margin call comes when your equity falls below the maintenance requirement as a share of the position. Because the borrowed amount is fixed while the position value falls, equity erodes faster than the price does. At fifty percent initial and twenty-five percent maintenance, a third of a fall wipes out the cushion, which is why leverage is dangerous long before it is fatal.

call price = entry * (1 - initial margin) / (1 - maintenance margin)

m_i: Initial margin (decimal)
m_m: Maintenance margin (decimal)

Worked examples

Each of these is asserted on every build. If a change to the engine ever moved one of these answers, the build would fail before the page could print it.

fifty percent initial against twenty-five maintenance

Entry price: 100
Shares: 1,000
Initial margin: 50%
Maintenance margin: 25%

Price that triggers a margin call$66.67

100 * 0.5 / 0.75, worked by hand

Open this example

no leverage means no call

Entry price: 100
Shares: 1,000
Initial margin: 100%
Maintenance margin: 25%

Price that triggers a margin call$0.00

boundary: a fully funded position cannot be called

Open this example

Method and limits

What it assumes

A long position with a fixed borrowed amount and no interim deposits.

What it deliberately does not model

Interest accruing on the borrowed amount brings the call closer and is not modelled.
Brokers may set house requirements above the regulatory minimum.

Formula version 1.0.0 · definition 1.0.0 · United States · Report a problem with this calculator

Frequently asked questions

Why does the call come at a smaller fall than I expected?: Because the loan does not shrink. As the position loses value, all of the loss comes out of your equity, so your equity share falls faster than the price does.