Maintenance Margin is the minimum amount that an investor needs to keep in their margin account with their broker. And this margin would allow the investor to keep a leverage position open with his broker.
To know more about it, click on the link given below:
https://efinancemanagement.com/derivatives/maintenance-margin
3. Maintenance Margin is the minimum amount that an investor needs to keep in their margin account with their broker.
And this margin would allow the investor to keep a leverage position open with his broker.
Meaning
4. Investor A wishes to go long on 200 shares of Company B trading at $200 per share. Here, an investor doesn’t need to
keep a full amount in the account. Rather, the broker has a margin requirement of 30%. So, the maintenance margin, in
this case, will be $12,000 (30% of $40,000).
If A has $12,000 in his account, he will be able to place the trade. However, if A’s account balance drops, he will have to
deposit money in his account to adhere to the margin necessity as well as to take up any further trade.
Example
5. The initial margin is the deposit that a trader uses to place trades while the variation margin helps to keep it open.
The initial margin will always be higher as compared to the maintenance margin that normally remains lower than the
initial margin.
Initial Margin & Maintenance Margin – Relation
6. Reference
To know more about it, click on the link given below:
https://efinancemanagement.com/derivatives/maintenance-margin